There are reports that the proposed merger between Tilney Group and Smith & Williamson has hit another stumbling block, this time due to the coronavirus outbreak.
This comes two months after International Adviser reported that the Financial Conduct Authority (FCA) raised a number of issues with the proposed transaction on the basis of how it was structured.
The two firms said, at the time, they were working with the regulator to fix any issues.
On 25 March, London-based newswire City AM stated a source with knowledge of the deal said Tilney’s valuation had been hit hard by the fall in the dollar value of its assets under management, making a deal between the two hard to conclude.
“Tilney is more reliant on wealth management and Smith & Williamson has its accounting practice as well as wealth management so it is more diversified,” City AM reported.
The newswire said that the deal is still progressing but there will be delays, however this is understandable as the FCA said it is not carrying out any non-vital activities for the time being.
Comments
IA contacted both firms. Tilney declined to comment on the matter.
Smith & Williamson did not comment in time prior to publication.
A spokesperson for Smith & Williamson said to City AM: “Both boards of Tilney and Smith & Williamson continue to believe in the strong strategic rationale for the transaction and conversations continue.
“In light of the covid-19 pandemic, the immediate focus for each business is on its clients and employees during this very demanding time.”
Terms of the deal
In September 2019, the firms said that Smith & Williamson shareholders will receive £625m ($749m, €683m) through a combination of cash and shares in the merged business.
The shareholders will be placing the majority of their investment into the equity of the enlarged group.
The transaction values the combined business at approximately £1.8bn.
Tilney Smith & Williamson will have revenue of around £500m and earnings before tax of £150m.
