Royal Bank of Canada announces proposed acquisition of Brewin Dolphin
PR95270
TORONTO, March 31, 2022 /PRNewswire=KYODO JBN/ --
Deal to create premier integrated wealth management provider in UK, Channel
Islands and Ireland
Royal Bank of Canada ("RBC") today announced that, subject to Brewin Dolphin
Holdings PLC ("Brewin Dolphin") shareholder approval and receipt of all
regulatory approvals, RBC is acquiring Brewin Dolphin.
Logo -
RBC Wealth Management (Jersey) Holdings Limited ("Bidco"), a wholly owned
subsidiary of RBC, has published a Rule 2.7 announcement in the UK under the
City Code on Takeovers and Mergers, announcing its recommended cash offer for
the entire issued and to be issued share capital of Brewin Dolphin for 515
pence per share, implying an equity value of approximately C$2.6bn (£1.6bn) on
a fully diluted basis.
Brewin Dolphin is one of the UK's leading independent providers of
discretionary wealth management in the UK and Ireland, with a network of more
than 30 offices and Assets under Management of £59bn as at December 31, 2021.
Brewin Dolphin has an impressive track record of growth and innovation and a
longstanding record of delivering superior client service and robust investment
performance.
Commenting on the acquisition, Doug Guzman, Group Head, RBC Wealth Management,
RBC Insurance and RBC Investor & Treasury Services, 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, giving RBC Wealth Management a # 3 market position in the UK and
Ireland, in addition to being a market leader in Canada, with a growing
position in the United States. By combining two highly complementary
businesses, we will increase the depth and breadth of our services and position
the combined business as a premier integrated wealth management provider to
private and institutional clients.
Both management teams are excited by a shared vision of high quality client
service, client-centric culture and the exceptional growth opportunities that
we can deliver together. We look to continue investing in the combined business
and take it to greater heights. We are confident that this acquisition will
deliver benefits to our combined clients, employees and stakeholders."
David Thomas, CEO, RBC Capital Markets Europe and Head, Wealth Management added:
"This is a transformative acquisition for RBC Wealth Management and cements
RBC's position as a market leader across multiple business platforms in the UK,
the Channel Islands and Europe. We look forward to welcoming Brewin Dolphin's
employees and clients and working together to leverage RBC's global reach and
significant capabilities to create new opportunities for the combined business
to grow."
Robin Beer, Chief Executive Officer of Brewin Dolphin, 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. Building on the strong organic growth that we have achieved to date,
the combined businesses will create an attractive platform for future growth.
As part of RBC we would be able to provide our clients with a broader range of
products and services, and expand our distribution channels through leveraging
RBC's global presence. We share complementary values which emphasize the
importance of long-standing client relationships and an inclusive culture
supportive of employees and local communities. Our focus will be on maintaining
continuity, so that we build on what we have already achieved. I am looking
forward to us working together to enhance our market position as a leading
advice-focused, digitally enabled wealth manager."
The acquisition is anticipated to result in a ~40 bps reduction in RBC's Common
Equity Tier 1 ("CET1") ratio1 at the Effective Date2. RBC believes that the
acquisition will result in an adjusted EPS accretion for RBC of ~1% in the
first year following the Effective Date excluding the benefit of future revenue
synergies.3 Over the medium term RBC believes that the combined wealth
management business in the UK, Ireland and Channel Islands can generate revenue
CAGR of ~9% and achieve adjusted profit before tax of ~C$0.5 billion including
the benefit of cost and revenue synergies4. The acquisition is expected to
generate a double-digit IRR5 excluding the benefit of future revenue synergies.
The acquisition is subject to a number of customary conditions specified in the
Rule 2.7 Announcement, including regulatory approvals and Brewin Dolphin
shareholder approval. We anticipate completion of this transaction by end of Q3
2022.
Full details of the acquisition can be found in the Rule 2.7 announcement which
is available at:
https://www.rbc.com/investor-relations/offer-for-brewin-dolphin.html.
About RBC
Royal Bank of Canada is a global financial institution with a purpose-driven,
principles-led approach to delivering leading performance. Our success comes
from the 88,000+ employees who leverage their imaginations and insights to
bring our vision, values and strategy to life so we can help our clients thrive
and communities prosper. As Canada's biggest bank, and one of the largest in
the world based on market capitalization, we have a diversified business model
with a focus on innovation and providing exceptional experiences to our 17
million clients in Canada, the U.S. and 27 other countries. Learn more at
rbc.com.
We are proud to support a broad range of community initiatives through
donations, community investments and employee volunteer activities. See how at
rbc.com/community-social-impact (
).
About RBC Wealth Management
RBC Wealth Management directly serves affluent, high net worth and ultra-high
net worth clients globally with a full suite of banking, investment, trust and
other wealth management solutions, from our key operational hubs in Canada, the
United States, the British Isles, and Asia. The business also provides asset
management products and services directly and through RBC and third party
distributors to institutional and individual clients, through its RBC Global
Asset Management business (which includes BlueBay Asset Management). RBC Wealth
Management has C$1.3 trillion of assets under administration, C$1 trillion of
assets under management and over 5,500 client facing advisors globally. For
more information, please visit www.rbcwealthmanagement.com.
_____________________________
1 CET1 is calculated using OSFI's Capital Adequacy Requirements (CAR)
guideline.
2 Based on RBC's and Brewin Dolphin's estimated balance sheets at the Effective
Date, including transaction related impacts.
3 This is a non-GAAP measure. Adjusted EPS excludes impact of intangibles
amortization, dilutive impact of exchangeable shares and certain deal,
transaction, integration costs.
4 This is a non-GAAP measure. Adjusted PBT is the statutory profit before tax
adjusted for the following items: amortisation of intangibles including client
relationships and brand; defined benefit pension scheme past service costs;
acquisition costs; incentivisation awards; onerous contracts and other gains
and losses.
5 "Internal rate of return".
About Brewin Dolphin
Brewin Dolphin is a UK FTSE 250 provider of discretionary wealth management.
With £59.0* billion in total funds, we offer award-winning, personalised wealth
management services that meet the varied needs of our clients including
individuals, charities and corporates.
Our services range from bespoke, discretionary investment management to
retirement planning and tax-efficient investing. Our focus on discretionary
investment management has led to significant growth in client funds and we now
manage £52.0* billion on a discretionary basis.
Our intermediary business manages £19.0* billion of assets for over 1,700
advice firms either on a discretionary basis or via our Managed Portfolio
Service, the MI Brewin Dolphin Voyager fund range and Sustainable MPS.
In line with the premium we place on personal relationships, we've built a
network of over 30 offices across the UK and Republic of Ireland, staffed by
qualified investment managers and financial planners. We are committed to the
most exacting standards of client service, with long-term thinking and absolute
focus on our clients' needs at the core.
For more information, visit: www.brewin.co.uk
*as at 31st December 2021.
Brewin Dolphin is authorised and regulated by the FCA (Financial Services
Register reference number 124444)
Key performance and non-GAAP measures
We use a variety of financial measures to evaluate our performance. In addition
to generally accepted accounting principles (GAAP) prescribed measures, we use
certain key performance and non-GAAP measures we believe provide useful
information to investors regarding our financial condition and result of
operations. EPS excluding the impact of intangibles amortization, dilutive
impact of exchangeable shares and certain deal, transaction and integration
costs enhances comparability as some institutions do not utilize such
structures.
Readers are cautioned that key performance measures and non-GAAP measures, do
not have any standardized meanings prescribed by GAAP, and therefore are
unlikely to be comparable to similar measures disclosed by other financial
institutions.
Caution Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of
certain securities laws, including the "safe harbour" provisions of the United
States Private Securities Litigation Reform Act of 1995 and any applicable
Canadian securities legislation, with respect to RBC's and Brewin Dolphin's
financial performance, beliefs, plans, expectations, and estimates.
Forward-looking statements in this press release may include, but are not
limited to, statements with respect to plans for the combined operations of RBC
and Brewin Dolphin, the financial, operational and capital impacts of the
proposed transaction, our strategies or future actions, and our objectives and
commitments. The forward-looking information contained in this press release is
presented for the purpose of assisting shareholders and analysts in
understanding the proposed transaction and may not be appropriate for other
purposes. Forward looking statements are typically identified by words such as
"believe", "expect", "foresee", "forecast", "anticipate", "intend", "estimate",
"goal", "plan" and "project" and similar expressions of future or conditional
verbs such as "will", "may", "should", "could" or "would".
By their very nature, forward-looking statements require us to make assumptions
and are subject to inherent risks and uncertainties, which give rise to the
possibility that our predictions, forecasts, projections, expectations or
conclusions will not prove to be accurate, that our assumptions may not be
correct and that our actual results may differ materially from such
predictions, forecasts, projections, expectations or conclusions.
We caution readers not to place undue reliance on these statements as a number
of risk factors could cause our actual results to differ materially from the
expectations expressed in such forward-looking statements. These factors – many
of which are beyond our control and the effects of which can be difficult to
predict – include, but are not limited to: the possibility that the proposed
transaction does not close when expected or at all because of the occurrence of
any event, change or other circumstances that could give rise to the right of
one or both of the parties to terminate the proposed transaction, including
because required regulatory, shareholder or other approvals and/or other
conditions to closing are not received or satisfied on a timely basis or at all
or are received subject to adverse conditions or requirements; the possibility
that the anticipated benefits from the proposed transaction, such as being
accretive to adjusted earnings per share (EPS), creating synergy opportunities
and growing our UK operations are not realized in the time frame anticipated or
at all as a result of changes in general economic and market conditions,
interest and exchange rates, monetary policy, laws and regulations (including
changes to capital requirements) and their enforcement, and the degree of
competition in the geographic and business areas in which RBC and Brewin
Dolphin currently operate; the risk that any announcements relating to the
proposed combination could have adverse effects on the market price of the
common stock of either or both parties to the transaction; the possibility that
the business of RBC and Brewin Dolphin may not perform as expected or in a
manner consistent with historical performance; the ability to promptly and
effectively integrate Brewin Dolphin; RBC's ability to achieve its capital
objectives; RBC's ability to cross-sell more products to customers;
reputational risks and the reaction of Brewin Dolphin's customers and employees
to the transaction; the possibility that the transaction may be more expensive
to complete than anticipated, including as a result of unexpected factors or
events; diversion of management time on transaction-related issues; increased
exposure to exchange rate fluctuations; material adverse changes in economic
and industry conditions; general competitive, economic, political and market
conditions; and those other factors discussed in the risks sections and Impact
of COVID-19 pandemic section of RBC's 2021 Annual Report and the Risk
management section of RBC's Q1 2022 Report to Shareholders, and the factors
discussed in Brewin Dolphin's Annual Report and Accounts 2021 all of which
outline certain key factors and risks that may affect our future results and
our ability to anticipate and effectively manage risks arising from all of the
foregoing factors.
We caution that the foregoing list of risk factors is not exhaustive and other
factors could also adversely affect our results. When relying on our
forward-looking statements to make decisions with respect to us, investors and
others should carefully consider the foregoing factors and other uncertainties
and potential events. Material economic assumptions underlying the forward
looking-statements contained in this press release are set out in the Economic,
market and regulatory review and outlook section and for each business segment
under the Strategic priorities and Outlook headings in RBC's 2021 Annual
Report, as updated by the Economic, market and regulatory review and outlook
section of RBC's Q1 2022 Report to Shareholders.
Any forward-looking statements contained in this document represent the views
of RBC and Brewin Dolphin only as of the date hereof. Except as required by
law, neither RBC nor Brewin Dolphin undertakes to update any forward-looking
statement, whether written or oral, that may be made from time to time by us or
on our behalf.
RBC Media Contacts: Melanie Rockliff, Corporate Communication (Canada) –
melanie.rockliff@rbc.com, +1 (647)-964-1423; Carol Key, Corporate
Communications (UK) – carol.key@rbc.com, +44 (0) 7701 396 234; RBC Analyst
Contacts: Asim Imran, Vice President, Head of Investor Relations,
asim.imran@rbc.com, +1 (416)-955-7804; Marco Giurleo, Senior Director, Investor
Relations, marco.giurleo@rbc.com, +1 (437)-239-5374
SOURCE RBC Wealth Management
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