(Alliance News) - Brooks Macdonald Group PLC on Friday announced a GBP30 million placing to help fund its acquisition of Cornelian Asset Managers Group Ltd.
Shares in London-headquartered investment management services firm Brooks Macdonald were down 0.3% at 1,820.00 pence in London in morning trade.
Brooks is to pay up to GBP39 million net for Edinburgh-based wealth and asset manager Cornelian. The initial consideration is GBP31 million, of which GBP9 million will be paid in Brooks Macdonald shares and the other GBP22 million in cash.
Should Cornelian meet performance targets - relating to client asset retention and growth, as well as the realisation of cost synergies - a further GBP8 million in cash will be payable.
The cash element of the acquisition will be funded through a placing representing around 12% of Brooks Macdonald shares at a price of 1,775 pence per share. The placing will take place via an accelerated bookbuild and Peel Hunt LLP will act as sole bookrunner.
Cornelian's financial figures for the financial year ended September 30 show funds under management of around GBP1.4 billion with growth in FUM of around GBP750 million since 2014. Its revenue for the recent year was approximately GBP10.3 million and its earnings before interest, tax, depreciation, and amortisation totalled around GBP3.4 million.
As a result of the buy, Brook Macdonald expects its pro forma funds under management to increase by roughly 10% to GBP14.7 billion with annual cost synergies estimated to be GBP3.8 million by the end of the first full year after completion of the deal.
The purchases is expected to be accretive to earnings per share in the 12 months ending June 2020, with accretion set to rise to around 9% in the year ending June 2021.
Chief Executive Caroline Connellan said: "From the outset of our discussions with Cornelian, we have been struck by the complementary cultures, investment processes and business models of the two firms, with both having a strong focus on clients and intermediaries. We are delighted that we have been able to agree a transaction that brings additional multi-asset capability and distribution strength into the group.
"The transaction creates value for our shareholders and crucially will provide benefits for both firms' clients and the intermediaries with whom we work. The acquisition of Cornelian is a significant step forward in our medium-term strategy of delivering sustainable, value-enhancing growth."
By Anna Farley; annafarley@alliancenews.com
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Brooks Macdonald (BRK)