Bank of Ireland has confirmed it has agreed terms to purchase Davy Stockbrokers’ wealth management and capital markets divisions, for €440m.
Davy has separately announced today that it is selling Davy Global Fund Management (DGFM) and its shareholding in Rize ETF to separate third parties.
The Irish Examiner reported this week that Davy has attracted a €105m bid from global financial services provider Waystone for the DGFM unit.
Davy had put itself up for sale in March and appointed Rothschild to oversee the sales process just days after the Central Bank slapped it with a €4.1m fine after a multi-year investigation disclosed the broker failed to detect wrongdoing in a 2014 sale of Anglo Irish bonds.
Bank of Ireland said Davy will retain its brand and structure but would benefit from “a range of comprehensive culture, risk and governance programmes that we have successfully introduced in recent years.”
The deal is conditional on approval by the Central Bank of Ireland and the Competition and Consumer Protection Commission.
Bank of Ireland will pay 25 per cent 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 €40m will be payable from 2025, contingent on future business model performance.
As a result of the acquisition, 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, currently estimated to be approximately €125m.
Founded in 1926, Davy manages more than €16bn in assets and employs over 800 people with offices in Dublin, Cork, Galway, Belfast, and London.
“Bringing Davy into the Group represents a significant milestone which will considerably enhance our customer offerings and growth outlook for the Group,” Bank of Ireland Chief Executive Francesca McDonagh said.
“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.”