Shares in Schroders jumped by almost 30% in early trading after the Investment management firm, one of the oldest names in the City of London, announced it is being acquired by US asset management group Nuveen for £9.9 billion in cash.
The Schroder family have agreed to sell their 42% stake to Nuveeen which is owned by the insurance group the Teachers Insurance and Annuity Association of America (TIAA).
The deal will create a business with $2.5 trillion of client assets, with the Schroders brand retained and London serving as the combined group’s headquarters outside the UK.
It will be its largest office with about 3,100 on the payroll and no significant job lossesNuveen is offering 612p per Schroders share, 590p in cash and remainer in permitted dividends. It represents a 29% premium share price last night. The transaction is expected to completed towards the end of this year, pending regulatory approval.
Richard Oldfield, group chief executive of Schroders, said: “In a competitive landscape where scale can help deliver benefits, in Nuveen we see a partner that shares our values, respects the culture we have built and will create exciting opportunities for our clients and people.
“The transaction will significantly accelerate our growth plans to create a leading public-to-private platform with enhanced geographic reach and a strengthened balance sheet. Together, we can create an exceptional opportunity to provide clients with a true breadth of high-quality solutions to meet their evolving needs.”
The market was taken by surprise when the deal was unveiled alongside Schroders’ annual results.
RBC analysts said: “The deal also has a positive readacross for the rest of the sector, as it acts as a statement in the value of traditional asset management, when many of the larger deals in recent times have been more defensive in nature.”
Nick Sherrard, managing director of Label Sessions, said: “The company has been beating expectations and the new partnership with Apollo to co-develop wealth and retirement solutions is an innovation that directly supports Schroders’ push into higher-fee private markets.
“Now the challenge is to execute on partnerships, technology upgrades, and product development without diluting margins, delays, and bloated costs. The wealth sector has found that kind of transformation hard to come by, but there is no reason why it is not very possible with strong leadership and smart strategy.
“No doubt, the opportunity to deliver on that is one of the main reasons behind Nuveen’s bid. And, if those ambitions can be delivered – and there are signs of that with today’s operating profit growth of 25% – there could be some very good days to come for Schroders.”
The TIAA is a non-profit founded by the Scottish American industrialist Andrew Carnegie to provide pensions for college professors. Its subsidiary, Nuveen, based in Chicago, was founded in 1898 and has assets under management today of $1.4 trillion.
BNP Paribas was sole financial adviser to Nuveen, with Wells Fargo and Barclays advising Schroders.
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