(AOF) – Strongest rise in the SRD market, the Rothschild & Co share jumped 16.27% to 56.80 euros, approaching the price of 48 euros offered by Concordia, the Rothschild family holding company and the group’s largest shareholder financier, to buy out the minority shareholders. Concordia, which owns 38.9% of the capital and 47.5% of the voting rights of Rothschild & Co, has announced its intention to file a simplified takeover bid at a price of 48 euros per share, dividends attached, and to request the implementation of a squeeze-out.
In this context, Concordia is currently in advanced negotiations with investors and banks to finalize the financing of this offer.
“None of the group’s businesses requires recourse to the capital markets. Moreover, their performance must be assessed over the long term. The status of a private company therefore seems more relevant than that of a listed company”, s is justified the holding of the Rothschild family.
This price of 48 euros per share, dividends attached, would reflect a premium of 19% compared to the last trading price on February 3, 2023 and a premium of 27% compared to the volume-weighted average prices 60 trading days before this date. , as well as a premium of 15% compared to the highest historical price, reached on January 13, 2022.
As announced today by Rothschild & Co, the latter plans to propose to the annual general meeting of shareholders of May 25, 2023 the payment of an ordinary dividend of 1.4 euros per share as well as, subject to the favor of the Supervisory Board of Rothschild & Co, an exceptional distribution of 8 euros per share.
Its payment would occur only if Concordia decided to submit this offer. The price of the offer, when filed, would be reduced by the distributions so paid.
The filing of the proposed offer will be subject to obtaining the required regulatory authorizations. The simplified tender offer could be filed with the Autorité des marchés financiers at the end of the first half of 2023.
Concordia insisted that the filing of this offer is subject to the finalization of the negotiations in progress.
Rothschild & Co took note of this transaction project and, within this framework, its Supervisory Board set up an ad hoc committee and appointed Finexsi, on the recommendation of this committee, as independent expert, responsible for drafting a report including an opinion on the offer and to give an opinion on the exceptional distribution.
The financial group will keep the market informed of the progress of this project, in particular on the occasion of the presentation of its annual results scheduled for February 13, 2023.
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Key points
– Independent financial advisory group created more than two centuries ago;
– Revenues of €2.9 billion, split between advisory for 66%, private banking and asset management for 25% and private equity and private debt (€11.3 billion in assets under management) for 9 %;
– Business model based on three pillars: consulting: strong international positions – 6
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world rank by revenue and 4
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by the number of transactions concluded – with a global approach between mergers – acquisitions, strategic advice and debt restructuring / private banking and asset management (€104 billion): mainly in Europe / private equity and debt private (€18.3 billion in assets under management);
– Track record of shareholder return and long-term revenue growth;
– Strengthening of the family concert in the capital, controlled at 54.1% in shares and 68.2% in voting rights, David de Rothschild chairing the 15-member supervisory board and Alexandre de Rothschild the management board;
– Solid financial position with €3.3 billion in equity, a high Tier 1 of 20.3% and liquid assets at 51% of total assets.
Challenges
– Specific strategy for each activity: consulting: strengthen the leading position in Europe, increase market share in the United States, accelerate growth in the rest of the world and generate more synergies between activities (10 to 20% of entries of capital in asset management comes from consulting and private equity) / asset management: accelerate growth in the 3 core business countries (France, Switzerland and the United Kingdom), reduce costs and increase the margin around 80%, generate more synergies n continue the integration of the former Martin Maurel / capital investment: increase recurring revenues, strengthen the positioning as a specialist in midcaps in Europe and the United States;
– Innovation strategy centered on the security of information systems;
– Environmental strategy for carbon neutrality by 2030: 70% reduction in CO2 emissions vs 2018 through the transfer to carbon elimination techniques and 91 of electricity from renewable sources / partnerships in biodiversity and reforestation / expansion of the range of “green” funds;
– Integration of acquisitions – the British Livingstone, specialized in advising medium-sized companies, the Swiss bank Pâris bertrand, the French fintech Scalens – and establishments – in private management in Spain.
Challenges
– Monitoring of the net book value per share, up at the end of June to €45.19;
– Strong disparity between the margins, that of private equity being much higher;
– Impact of inflation: maintenance of more difficult market conditions;
– After a 2% increase in revenues and a 28% decline in net income on 1
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semester, 2022 expectations: financial advisory: continuation of the activity levels of 1
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semester but slowdown in the pipeline / private banking and asset management: cautious for the rest of the year but revenues supported by recent acquisitions in France and Switzerland and by the rise in rates / merchant banking: continued revenue growth recurring and value creation;
– Share buyback program and interim dividend of €3.79 for 2021.