TIDMBIRG
RNS Number : 1210G
Bank of Ireland Group PLC
22 July 2021
Bank of Ireland Group plc (together with its subsidiaries the
"Group")
Acquisition by Bank of Ireland of Davy - Ireland's leading
wealth and capital markets provider
22 July 2021
The Group announces that it has reached an agreement to acquire
J&E Davy ("Davy"), Ireland's leading provider of wealth
management and capital markets services, for an enterprise value of
EUR440 million, subject to certain customary adjustments including
capital at completion (the "Enterprise Value"). 25 percent of the
Enterprise Value will be paid two years after completion subject to
Davy shareholders meeting a number of agreed criteria. The balance
will be paid as cash consideration on completion, which is expected
in 2022. In addition, further payments of up to EUR40 million will
be payable from 2025, contingent on future business model
performance.
Davy has separately announced today that it is selling Davy
Global Fund Management (DGFM) and its shareholding in Rize ETF to
separate third parties. As a result, Davy is expected to have a
significant excess cash position at completion over and above that
which is required to run the Business. Bank of Ireland will also
pay for such excess cash, due to be finalised at completion, which
will be largely comprised of the proceeds from these disposals,
currently estimated to be c.EUR125 million.
Founded in 1926, Davy manages in excess of EUR16 billion of
client assets and employs over 800 people, including 83 employed by
DGFM. The company has offices in Dublin, Cork, Galway, Belfast, and
London, providing wealth management, capital markets advisory
services, and DGFM services to its clients.
For the year ended 31 December 2020, Davy had adjusted profit
before tax of EUR32.8 million(1) and adjusted gross assets of
EUR756.3 million(2) . On the date of acquisition, the CET1 capital
ratio impact is expected to be c.80bps financed through existing
resources. Acquiring Davy will materially increase the Group's
wealth and fee income and the acquisition is expected to be
accretive to earnings in the first full year of ownership,
excluding transaction related payments.
Acquiring Davy strongly supports the Group's commercial and
strategic objectives. Growing the wealth and insurance business is
a stated strategic priority for the Group, with the aim of
unlocking growth opportunities in Ireland, increasing fee income,
and generating sustainable profits. Bank of Ireland's wealth and
insurance business currently has over 600,000 customers, including
more than 250,000 wealth customers. The acquisition of the
market-leader Davy significantly strengthens the range of services
available to Group customers including in the high net worth and
mass affluent categories. In addition, Bank of Ireland is Ireland's
leading Corporate Bank with over 500 Irish customers and a niche
offering in the UK to mid-corporates; the acquisition of Davy
enhances the combined service offering to corporate clients of both
companies and provides further opportunities for growth.
Francesca McDonagh, Group Chief Executive of Bank of Ireland,
commented: "When we look at any acquisition, we consider two key
things - if it offers value to our shareholders, and if it is a
good fit for our business. Davy scores very highly on both.
"Wealth management and capital markets are important parts of
our business. Bringing Davy into the Group represents a significant
milestone which will considerably enhance our customer offerings
and growth outlook for the Group. It is our ambition to build on
Davy's unrivalled leadership position in these businesses, while
also enabling it to benefit from a range of comprehensive culture,
risk and governance programmes that we have successfully introduced
in recent years. Accordingly, we see a continuation of the Davy
brand and structure, under the Bank of Ireland umbrella.
"We welcome the Davy team and all of Davy's clients to Bank of
Ireland. We look forward to growing our business and enhancing
customer propositions across the entire Group in the years
ahead."
Bernard Byrne, Interim Chief Executive of Davy, added: "Our view
throughout this sales process has been that the right owner for
Davy is the owner that is right for our client base and people. We
are confident that in Bank of Ireland we are joining a Group that
supports our vision for the business and presents significant
opportunity for all stakeholders, particularly for our clients in
supporting their growth ambitions."
Completion of the acquisition is conditional on the satisfaction
of customary conditions including approval by the Central Bank of
Ireland and the Competition and Consumer Protection Commission.
Bank of Ireland was advised by IBI Corporate Finance and Credit
Suisse International.
This announcement contains inside information.
1. The Davy adjusted profit before tax of EUR32.8 million is
based on the Davy reported profit before tax for the year ended 31
December 2020 of EUR29.5 million and adjusting for the profit
before tax of EUR0.7 million relating to DGFM and Rize ETF which do
not form part of the assets being acquired and EUR4.1 million of
finance costs linked to debt and swaps that will be repaid from
proceeds.
2. Reported gross assets of EUR779.4 million less gross assets
for DGFM of EUR21.6 million and carrying value of Rize ETF of
EUR1.5 million.
Ends
For further information please contact:
Bank of Ireland
Myles O'Grady, Group Chief Financial Officer +353 (0)1 2508900
ext. 43291
Darach O'Leary, Head of Group Investor Relations +353 (0)1
2508900 ext. 44711
Damien Garvey ,
Head of Group External Communications & Public Affairs +353 (0)86 8314435
Forward Looking Statement
This announcement contains forward-looking statements with
respect to certain of Bank of Ireland Group plc ('BOIG plc') and
its subsidiaries' (collectively the 'Group') plans and its current
goals and expectations relating to its future financial condition
and performance, the markets in which it operates and its future
capital requirements. These forward-looking statements often can be
identified by the fact that they do not relate only to historical
or current facts. Generally, but not always, words such as 'may,'
'could,' 'should,' 'will,' 'expect,' 'intend,' 'estimate,'
'anticipate,' 'assume,' 'believe,' 'plan,' 'seek,' 'continue,'
'target,' 'goal,' 'would,' or their negative variations or similar
expressions identify forward-looking statements, but their absence
does not mean that a statement is not forward-looking.
Examples of forward-looking statements include, among others:
statements regarding the Group's near term and longer term future
capital requirements and ratios, level of ownership by the Irish
Government, loan to deposit ratios, expected impairment losses, the
level of the Group's assets, the Group's financial position, future
income, business strategy, projected costs, margins, future payment
of dividends, the implementation of changes in respect of certain
of the Group's pension schemes, estimates of capital expenditures,
discussions with Irish, United Kingdom, European and other
regulators and plans and objectives for future operations. Such
forward-looking statements are inherently subject to risks and
uncertainties, and hence actual results may differ materially from
those expressed or implied by such forward-looking statements.
Nothing in this announcement should be considered to be a
forecast of future profitability, dividends or financial position
of the Group and none of the information in this announcement is or
is intended to be a profit forecast, dividend forecast or profit
estimate. Any forward-looking statement speaks only as at the date
it is made. The Group does not undertake to release publicly any
revision to these forward-looking statements to reflect events,
circumstances or unanticipated events occurring after the date
hereof.
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