Toronto-based Royal Bank of Canada will acquire London-based BlueBay Asset Management in a deal valued at £963 million, or $1.54 billion.
RBC has made 485p a share cash offer that represents a premium of 29.1 per cent to BlueBay’s closing price of 375.7p last Friday, and reflects a 57.7 per cent premium to the average closing of 307.63p in the past three months.
The deal announcement resulted in a major rally in BlueBay shares Monday as they opened at 488.1p, showing a 30 percent boost and were included in the biggest risers among FTSE 250 mid-cap stocks.
The acquisition offer enjoys full support from BlueBay’s directors as they have given irrevocable undertakings to vote their 20.5 per cent shareholding in favor of the deal.
The company was founded by chief executive Hugh Willis, and chief investment officer Mark Poole, who have 8.5 percent stakes in the company, which are now valued at £81 million each. The duo sold £21m each of the company’s shares in February of this year.
For the year ended June. 30, BlueBay posted a pre-tax profit of £50 million on assets under management, showing a rise of 41 per cent, to $34.3bn. The company earned $5.7 billion in profits for the quarter ending Sept. 30, showing an increase of 17 per cent; the net value of total assets under management rose to $40bn during the quarter.
A former manager of BlueBay’s emerging markets fund was fined £140,000 in February and banned from the industry as the UK’s Financial Services Authority found that he misled the regulator about the value of assets under his management.
