(Alliance News) - Bank of Ireland on Thursday unveiled the acquisition of wealth management firm J&E Davy for an enterprise value of EUR440 million.
The bank said 75% of the enterprise value will be paid as a cash consideration on completion, which is expected in 2022. The remainder will be paid two years after completion subject to Davy shareholders meeting agreed criteria.
Further payments of up to EUR40 million will be payable to Dublin-based Davy from 2025 dependent on future performance.
Davy announced on the same day the sale of both Davy Global Fund Management and its majority stake in Rize ETF Ltd.
The stake in Rize ETF, an exchange-traded fund issuer, is being bought by AssetCo PLC, which announced that acquisition separately. The global funds business is being bought by private equity firm IQ-EQ. It means Bank of Ireland will get Davy's wealth management, capital markets and associated business.
Through the sales, Davy is expected to have a significant excess cash position that exceeds the cost required to run the business. Bank of Ireland will buy the excess cash at completion, which is currently estimated at EUR125 million.
"When we look at any acquisition, we consider two key things - if it offers value to our shareholders, and if it is a good fit for our business. Davy scores very highly on both," said BOI Chief Executive Francesca McDonagh.
"Bringing Davy into the group represents a significant milestone which will considerably enhance our customer offerings and growth outlook."
The buy is expected to enhance the bank's earnings in its first full year of ownership.
Davy Interim Chief Executive Bernard Byrne said the firm is confident that the Bank of Ireland is the right owner for Davy and supports its ambitions.
In 2020, Davy's pretax profit was EUR29.5 million and it had gross assets of EUR779.4 million.
By Josie O'Brien; josieobrien@alliancenews.com
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Bank Of Ireland (BIRG)
Assetco (ASTO)