Rathbone are an investment management firm based in the UK. This market leader provide services from investment management and financial planning to tax advice and ethical investment.
Rathbone Brothers Plc (LSE:RAT) reached an agreement to acquire Saunderson House Ltd from Epiris Fund II L.P., a fund managed by Epiris LLP, and the management and employees of Saunderson House for £150 million.
Rathbone Brothers Plc (LSE:RAT) reached an agreement to acquire Saunderson House Ltd from Epiris Fund II L.P., a fund managed by Epiris LLP, and the management and employees of Saunderson House for £150 million on June 23, 2021. Under the terms of the transaction, total consideration of £150.0 million will be payable to funds advised by Epiris LLP and the management and employees of Saunderson House which will comprise of initial cash and share consideration amounting to £135.1 million, including the repayment of debt, structured as £130.2 in cash and £4.9 million in new Rathbones shares payable at completion. The initial cash consideration will be funded from a combination of internal cash resources and the proceeds of a proposed £50.0 million placing (representing c.5% of Rathbones’ issued share capital). The initial share consideration will be locked up for three years from completion and will be subject to ongoing employment conditions for the management and employee sellers. Rathbones has also agreed to pay deferred consideration of £14.9 million on the first anniversary of completion. This will comprise £10.9 million in cash and £4.0 million to be issued by way of new Rathbones shares. Key employees will also be eligible to participate in an employee incentive plan with a value of up to £7.5 million based on achieving growth and operational targets aligned to the value creation of the transaction by the end of 2024. These mechanisms aim to reward the incremental delivery of EPS accretion and return on investment. For the fiscal year ending December 2020, Saunderson House reported revenue of £34.7 million, operating profit of £6.0 million, and gross assets of £20.6 million. The acquisition of Saunderson House further strengthens Rathbones’ financial planning capability, increasing the number of in-house financial planners from 25 to 80. The acquisition is subject to approval by the FCA and is expected to complete in the third quarter of 2021.The Board of Rathbones expects: underlying EPS accretion of approximately 10% and return on investment of approximately 12% in the third year following completion; the transaction to be EPS accretive on an underlying basis in the first full year following the acquisition; attractive revenue synergies from: aligning the Saunderson House service proposition with that of Rathbones; leveraging the strength of Rathbones’ brand and platform to drive further origination; and the continued trend of clients converting from an advisory mandate to discretionary arrangements; cost synergies from the streamlining of operational processes having taken advantage of the best of the combined skills and capabilities of both companies; delivery of synergies to be phased over time to maintain operational stability and quality of service throughout the transition; and capital levels to continue to remain robust incorporating a management buffer and providing sufficient capital for further small acquisitions in a consolidating market. Rathbones is being advised by RBC Capital Markets (Financial Adviser and Joint Corporate Broker) and Addleshaw Goddard (Legal Adviser) in relation to the transaction. Saunderson House is being advised by Fenchurch Advisory Partners (Financial Adviser) and Macfarlanes (Legal Adviser). The Saunderson House management team is being advised by Eversheds Sutherland while Epiris is advised by Fenchurch Advisory, Macfarlanes and PwC.