August 31, 2017 / 7:17 PM / a year ago

Smith & Williamson to pursue listing after ditching Rathbones merger

(This Aug 31 story corrects spelling of Blake Goldring in paragraph 7)

By Ben Martin and Parikshit Mishra

(Reuters) - Wealth manager Smith & Williamson (S&W) plans to pursue a potential stock listing after its merger talks with rival Rathbone Brothers (RAT.L) collapsed on Thursday.

S&W said in a statement it was preparing for a potential stock listing when it was approached by Rathbones.

Now that talks with Rathbones had ended, a float was back on the table, a spokeswoman for S&W told Reuters.

The failure of discussions with Rathbones could open the way for competitor Tilney to revive an unsuccessful counterbid for S&W that Reuters reported this week.

Tilney launched its approach after Rathbones confirmed that it was holding discussions about an all-share merger with S&W, owned by former and current employees as well as AGF.

The S&W spokeswoman said they were not currently in discussions with Tilney.

"AGF will actively pursue alternatives to realize value in its investment in Smith & Williamson for the benefit of AGF shareholders," Blake Goldring, chief executive officer of AGF, said in a statement.

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

“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 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.

Tilney did not respond to requests for comment.

Editing by David Evans and David Gregorio

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