August 29, 2017 / 3:09 PM / 3 months ago

Tilney makes failed counter-bid for wealth manager Smith & Williamson

LONDON (Reuters) - Wealth management firm Tilney has made an unsuccessful attempt to scupper Rathbone Brothers’ (RAT.L) proposed merger with rival Smith & Williamson by mounting its own counter-bid, two sources close to the matter told Reuters.

The pursuit of S&W, which is owned by its employees and Canadian investment firm AGF, comes against the backdrop of a consolidation wave as the sector contends with higher regulatory costs and pricing pressure from cost-conscious investors amid low returns and competition from passive funds.

Tilney approached S&W with its competing offer this month but no discussions were held, the sources said, declining to comment on the content of the offer.

The wealth manager made its move after it emerged on Aug. 19 that S&W was holding exclusive talks with FTSE 250-listed Rathbone over an all-share deal, the sources added.

Tilney, which manages 23 billion pounds ($29.78 billion) of assets and is majority owned by private equity house Permira, might consider reviving its interest in S&W if the Rathbone talks collapse, the sources said.

Tilney, S&W and Rathbone declined to comment.

Sky News, which first reported the Tilney approach, said its plan involved an all-cash offer. The broadcaster previously reported that Rathbone had proposed a 2 billion pound all-share deal structured as a takeover.

A third source told Reuters that the Rathbone offer values S&W at between 500 million pounds and 600 million pounds. Rathbone has a market capitalization of 1.4 billion pounds.

This year’s sector consolidation has already seen British asset manager Henderson complete a $6 billion tie-up with U.S. firm Janus (JHG.N). Aberdeen Asset Management also sealed a merger with Standard Life to form Britain’s biggest active manager (SLA.L) with about 670 billion pounds of assets.

Reporting by Ben Martin; Editing by David Goodman

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