LONDON South African finance group Investec (INLJ.J) is to buy British investment bank Evolution (EVG.L) in an agreed 233 million pounds ($374 million) takeover deal designed to boost Investec's wealth management and broking arms.
Investec said on Friday its offer was worth 100.24 pence per Evolution share, a 6.6 percent premium to Evolution's closing share price on September 8.
Investec, which runs investment banking and fund management businesses, had been vying with Canaccord Financial (CF.TO) for Evolution, until Canaccord pulled out on Thursday.
Evolution's main interest for bidders has been its Williams de Broe wealth management division, while its Evolution Securities investment banking and broking arm has a solid range of corporate clients in Britain.
"The transaction strengthens our position in the UK, giving us greater scale in both private client wealth management and investment banking," Investec Chief Executive Stephen Koseff said.
JOB CUTS LIKELY AT INVESTMENT BANK
Investec CEO Koseff told reporters on a conference call that the Evolution takeover would result in some job cuts but said any cuts would more likely occur in the investment bank part of the business rather than private client wealth management.
"There will be some adjustment in staff within the investment bank," said Koseff. Koseff added that Investec would also consider further opportunities for deals.
Investec's London-listed shares edged lower by 0.4 percent in early morning trade, while Evolution rose by 2 percent to 96 pence.
Numis Securities reiterated its "buy" rating on Investec following the company's agreed acquisition of Evolution.
"This is not a game changing deal but it is one which builds up incremental funds under management in what we believe is the most valuable part of Investec, namely its asset and wealth management divisions," said Numis analyst David McCann.
Evolution was set up in 1999, and grew steadily under the leadership of former junior England rugby international Alex Snow, who will become the executive chairman of Investec's UK investment banking division.
Many of Britain's smaller investment banks have had to seek out mergers or buyout deals after being hit by the financial market downturn and increasing regulatory costs.
American investment bank Evercore Partners (EVR.N) bought advisory firm Lexicon Partners in June, while in February 2010 Portuguese lender Banco Espirito Santo BES.LS bought a majority stake in stockbroker Execution Noble.
Evolution itself made an attempt last year to buy rival Panmure Gordon (PMR.L) but ended up dropping the bid.
Credit Suisse CSGN.VX advised Evolution on the deal, while Investec used its own internal team.
($1 = 0.622 pound)
(Reporting by Sudip Kar-Gupta; Editing by Dan Lalor)