Old Mutual has confirmed it is to acquire discretionary firm Quilter Cheviot for a consideration of up to £585m, with the firm to form part of its Old Mutual Wealth business.
The company stated the acquisition of Quilter Cheviot, which currently has 38,000 clients and funds under management of £16.2bn, would add a strong discretionary investment management capability, as well as “accelerating” Old Mutual Wealth’s business strategy.
Following regulatory approval of the deal Quilter Cheviot will become the discretionary investment management business within Old Mutual Wealth.
Martin Baines, chief executive of Quilter Cheviot, will remain in his role and will join the Old Mutual Wealth executive committee, reporting to Paul Feeney, chief executive of Old Mutual Wealth.
Mr Feeney commented: “Quilter Cheviot fills a significant gap in our business, allowing us to serve better the affluent and high net worth segments.”
In a statement Old Mutual revealed the acquisition would be funded by investing the proceeds from the sales of “non-core European businesses”, expected to raise £245m, and the minority listing of Old Mutual Asset Management (OMAM) in the US, which raised £191m in addition to a pre-IPO special dividend of £109m.
Under the terms of the acquisition, Old Mutual will pay a consideration of up to £585m at completion. This includes approximately £42m of equity that will be “deferred and contingent on the performance of the business”. The company also stated the acquisition will result in “goodwill” of £489m.
The company added the deal will provide attractive strategic and financial benefits, with the acquisition expected to generate annual group synergies of roughly £15m by 2017.
Julian Roberts, group chief executive of Old Mutual, said: “The acquisition of Quilter Cheviot delivers the final substantive part of our investment programme in the UK toward building a vertically integrated wealth management business of scale in the UK.
“We have a robust integration strategy for Quilter Cheviot. Our executive team is committed and accountable for delivering on synergy and return on equity targets and creating value for shareholders.”
The transaction is expected to complete, subject to regulatory approval, in the first quarter of 2015.
