Royal Bank of Canada (RY on TSX and NYSE) and BlueBay Asset Management plc (BBAY on LSE) today announced that their respective boards have reached an agreement on terms for a recommended acquisition of BlueBay by RBC.
Under the terms of the acquisition, BlueBay shareholders will be entitled to receive 485 pence in cash for each BlueBay share. This represents a premium of 29 per cent to the last closing price of BlueBay shares, as at Friday, October 15, 2010.The acquisition values the issued share capital of BlueBay at approximately £963 million (C$1.56 billion). It is expected that the acquisition will be implemented by way of a court-approved arrangement and that formal documentation will be sent to BlueBay shareholders in November 2010.
The Board of BlueBay has unanimously recommended that its shareholders vote in favour of the acquisition. It is anticipated that, subject to the satisfaction of all regulatory and other conditions, the acquisition will close by the end of December 2010. The transaction will be funded using RBC's existing cash resources, and is not expected to have a material impact on RBC's earnings per share in the near term.
BlueBay is one of Europe's largest independent managers of fixed income debt funds and products, with US$40 billion in assets under management (as at September 30, 2010) on behalf of institutional and high net worth investors in the UK, Europe, the U.S., the Middle East, Asia and Australasia. Based in London, BlueBay manages a combination of long-only and alternative investment strategies across the sub-asset classes of fixed income credit - primarily focused on European and emerging markets strategies - including: investment grade corporate debt, high yield corporate debt, emerging market debt, convertible bonds, distressed debt, and multi-strategy debt capabilities. In order to best serve its clients, BlueBay will retain its investment autonomy and related operational independence following the acquisition. The 220 employees of BlueBay will become valued members of RBC's Global Asset Management business and collaborate with their new partners in RBC Wealth Management, RBC's global segment for wealth and asset management solutions.
"This acquisition will further RBC's strategy to leverage our position as a top 10 global wealth manager, and continue to expand our asset management solutions for the benefit of our clients around the world," said George Lewis, group head, RBC Wealth Management. "BlueBay is an ideal fit with RBC's growing asset management business and we are confident that this transaction will benefit clients, employees and shareholders of both firms."
"Both management teams are excited by a shared vision of investment performance excellence and the exceptional growth opportunities which a combination of our two firms offers," said John Montalbano, CEO of RBC Global Asset Management. "We believe this to be a uniquely positive transaction for the clients and employees of both our organizations."
"Our board is unanimously recommending this combination with RBC because of the clear benefits it affords the firm's shareholders, clients and employees," said Hans-Jörg Rudloff, chairman of BlueBay.
"RBC's strength and stability make it an ideal partner for BlueBay," said Hugh Willis, CEO of BlueBay. "Its commitment to its clients and its high standards of business practices mirror our own and lie at the heart of the excellent cultural fit between our firms. We greatly look forward to working together in providing our clients with world class investment solutions."
Today's announcement follows RBC Wealth Management's announcement in September that it will be moving from three geographic wealth management businesses to four (Canada, United States, UK and Emerging Markets), that it aims to replicate the success achieved in the Ultra High Net Worth segment in Canada across international markets, and, establish a Global Trust business - highlighting its world-class trust capabilities. RBC Wealth Management's continued focus on leveraging the capabilities and expertise of its most profitable business, RBC Global Asset Management, to drive further growth, is reinforced through today's announcement.
A conference call is scheduled to take place on October 18, from 8:30 a.m. to 9:00 a.m. (ET) / 1:30 p.m. to 2:00 p.m. (BST) and will feature a presentation followed by a brief question and answer period with analysts. Interested parties can access this call live on a listen-only basis via telephone at: +1-416 695-7806 or 1-888-789-9572, passcode 3843540#. Please call between 8:20 a.m. and 8:25 a.m. (ET).