Julius Baer has agreed to acquire Merrill Lynchs International Wealth Management business (IWM) based outside the U.S., which has $84 billion of assets under management, for approximately 860 million Swiss francs ($885 million). Subject to shareholder and regulatory approvals, the deal is expected to be completed by early 2013.
The firm to add between CHF 57 billion and CHF 72 billion in AuM following a combination of legal entity acquisitions and business transfers through a two-year integration period. On the high end, CHF 72 billion in addition AuM would increase Julius Baers assets by approximately 40% to CHF 251 billion and its total client assets to CHF 341 billion.
As part of the deal, Bank of America Merrill Lynch (BAML) will provide certain products and services to Julius Baer, including global equity research, in addition to cross-referral of clients between the organizations.
The deal will be funded by up to CHF 0.53 billion from Julius Baer capital, CHF 0.2 billion from the issuance of new hybrid instruments and CHF 0.74 billion of new share capital, of which CHF 0.24 billion is to be issued to BofA as part of the consideration. Additionally, CHF 500 million will be raised via a proposed rights offer, along with CHF 250 million in new share capital for future strategic flexibility.
Julius Baer plans to restructure its management structure following acquisition.
After the first full year after the combination of the businesses, Julius Baer targets net new money of 4-6%, a cost/income ratio of 65-70% and a pre-tax profit margin of 30-35 bps.
This transaction represents a rare opportunity to acquire an international pure-play wealth management business of significant size and will add substantial scale to our business in Europe and in key growth markets in Asia, Latin America and the Middle East, says Daniel J. Sauter, chairman of the Julius Baer Group. Due to its strong presence in strategic growth markets and its business characteristics, Merrill Lynchs International Wealth Management business is an excellent strategic, cultural and geographic fit for Julius Baer.
Boris F.J. Collardi, CEO of the Julius Baer Group, adds: This acquisition brings us a major step forward in our growth strategy and will considerably strengthen Julius Baers leading position in global private banking by adding a new dimension not only to growth markets but also to Europe. The compatibility and complementarity of the two business models, once integrated, will create a new reference in private banking and a powerful offering for all clients of the combined businesses.
(CG)