Rathbones vows to continue acquisition hunt

Rathbones vows to continue acquisition hunt

The chief executive of Rathbones has confirmed the company is still in the hunt for possible merger and acquisition opportunities.

Last night (31 August) it was revealed Rathbones proposed tie-up with Smith & Williamson will not go-ahead.

In a statement to to stock exchange, Philip Howell, chief executive of Rathbone Brothers, said: “The potential combination was intended to accelerate Rathbones' existing strategy, but ultimately we were unable to agree terms that offered our shareholders an appropriate balance of risk and reward.

"Rathbones remains confident in its strategy and will continue to look for growth opportunities in the sector and assess them with discipline."

He added that following extensive due diligence and negotiations, Rathbones felt an agreement could not be reached with Smith & Williamson that was in the interests of Rathbones shareholders.

Paul Mumford, who runs the £147m Cavendish Opportunities fund, has long been cautious on the investment case for asset management companies. He takes the view that such businesses are inherently cyclical and that merger and acquisition activity, and the scale it brings, does not address this.

Simon Gergel, who runs the £686m Merchants Investment Trust, said he believes the trend of merger and acquisition activity will continue into the future as the successful asset management companies of the future will have to be either very big or very niche.  

Patrick Connolly, chartered financial planner at Chase De Vere, said: "We do expect to see further consolidation in asset management, as we do in financial services generally. Some asset managers will want to acquire other managers with expertise in specific areas, firms that are performing poorly and seeing outflows could become attractively priced targets."