Tilney Smith & Williamson  

Covid-19 puts brakes on Tilney and Smith & Williamson deal

Covid-19 puts brakes on Tilney and Smith & Williamson deal

The ongoing coronavirus crisis has pumped the brakes on Smith & Williamson's £625m merger deal with rival Tilney. 

The delay comes as the two companies attempt to renegotiate a transaction structure which will satisfy the requirements of the Financial Conduct Authority. 

The merger was first announced in September last year, but the deal hit regulatory hurdles earlier this year when it emerged the watchdog had not approved the move. 

In an update on its website Smith & Williamson said "significant progress" had been made in working towards a revised structure, but the challenges posed by the coronavirus pandemic and global lockdown had stalled the process.

The new transaction structure would feature a "material" new equity investment and therefore a significant reduction in the external debt levels of the combined group.

According to Smith & Williamson, the two parties have agreed to extend the original long-stop date for the merger, which was first set for today (April 16), with a decision expected by the end of May 2020.  

But the wealth manager warned there was "no certainty" the transaction would proceed in light of the current pandemic and the need for the revised transaction structure to achieve regulatory approval. 

David Cobb and Kevin Stopps, co-chief executives of Smith & Williamson, said: "We continue to believe in the compelling strategic rationale of this merger and are pleased to report that significant progress has been made towards revisions to Tilney’s transaction structure that address the points raised by the FCA. 

"However, in light of the extraordinary circumstances created by the Covid-19 pandemic, the transaction process has inevitably been delayed.

"If the parties can agree amendments to the transaction structure that the Smith & Williamson board is able to recommend, we will ask our shareholders to vote on whether the revised transaction should go ahead."


What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.