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Royal Bank of Canada swoops on Brewin Dolphin in £1.6bn deal: 260-year-old City stalwart set to fall into foreign hands with shares soaring 61%
One of the City of London’s oldest firms looks set to fall into foreign hands in a £1.6billion deal.
Brewin Dolphin, which dates back to 1762 and looks after £55billion of funds for more than 80,000 clients, has agreed to a takeover by Royal Bank of Canada (RBC).
The 515p-a-share offer was 62 per cent higher than the closing price on Wednesday before the deal was announced.
Deal agreed: Brewin Dolphin, which dates back to 1762 and looks after £55bn of funds for more than 80,000 clients, has agreed to a takeover by Royal Bank of Canada
The Brewin Dolphin board urged shareholders to back the takeover.
Shares jumped 61 per cent, or 194p, to 512p, and FTSE 250 rival Rathbones was up 12.2 per cent, or 216p, to 1980p on speculation that others in the sector could become bid targets.
The proposed Brewin takeover – which needs to be ratified by shareholders – is likely to lead to a number of job losses and comes as RBC looks to beef up its operations in the UK.
And it is just the latest in a wave of consolidation in the wealth management sector in London as firms face mounting costs over technology and compliance.
Brewin Dolphin rival Charles Stanley – a fixture of the Square Mile since 1792 – was bought by US investment bank Raymond James for £279million.
FTSE 100 group Abrdn has snapped up stock trading website Interactive Investor for £1.5billion and JP Morgan bought wealth management platform Nutmeg for £700million.
The deals have come amid a spree of foreign buyers taking over British companies since the pandemic struck, with Morrisons, John Menzies, Ultra Electronics and Meggitt all targeted.
RBC, one of Canada’s largest banks, plans to combine Brewin Dolphin with its existing UK wealth business to create a group that manages around £64billion of savers’ cash – making it the third biggest player in the UK and Ireland.
It warned there would be ‘limited headcount reductions’ among Brewin Dolphin’s workforce of over 2,000 staff.
Analysts at Jefferies said the price offered by RBC ‘demonstrates the attractiveness of the UK wealth market, with long-term, stable income streams and the potential for growth and higher operating margins’.
Founded in 1864, the Royal Bank of Canada has a market value of around £121billion and employs 88,000 people worldwide.
RBC chief Doug Guzman said: ‘The UK is a key growth market for RBC and Brewin Dolphin provides us with an exceptional platform to significantly transform our wealth management business in the region.’
Now one of the largest wealth managers in the UK, Brewin Dolphin traces its roots back to when John Dawes from Cumbria set up as a stockbroker in London in 1762.
The company grew into Wontner, Dolphin & Francis and eventually became Brewin Dolphin in 1974 following a merger with Brewin & Co.
Chief executive Robin Beer said: ‘The Brewin Dolphin board is pleased to recommend the offer by RBC in the interests of our shareholders, our clients, our people and our business partners. The combined business will create an attractive platform for future growth.’
He added: ‘As part of RBC we would be able to provide our clients with a broader range of products and services.’
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