Rathbone Brothers terminates merger talks with Smith & Williamson: Reuters

Rathbone Brothers (RAT.L) has abandoned an attempt to merge with rival wealth manager Smith & Williamson (S&W) after failing to agree to a deal that would have been “in the best interests” of its shareholders.

The FTSE 250 company said on Thursday it had carried out “very extensive due diligence and negotiations” but had ended exclusive talks between the two British firms.

The collapse of discussions potentially opens the way for competitor Tilney to revive an unsuccessful counterbid that Reuters reported earlier this week.

Tilney launched its approach after Rathbones confirmed earlier this month that it was holding discussions about an all-share merger with S&W, which is owned by current and former employees and Canadian investment firm AGF.

“We continue to believe that our proposition was both a compelling strategic and value creation opportunity for all Smith & Williamson’s stakeholders,” Rathbones’ boss Philip Howell said in a statement.

“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.”

The wealth manager said the cost of working on the failed deal would see it take a charge of about 5 million pounds ($6.5 million) in 2017.

Rathbones’ proposal valued S&W at between 500 million pounds and 600 million pounds, a source told Reuters earlier this week.

Rathbones’ shares closed down 0.5 percent at 27.80 pounds on Thursday, giving it a market capitalization of around 1.4 billion pounds.

Two sources told Reuters on Tuesday that Tilney, a wealth manager controlled by private equity house Permira, had failed in an attempt to open discussions with S&W.

The sources said at the time that Tilney would consider making a fresh bid if the Rathbones talks collapsed.

S&W and Tilney did not return requests for comment.