By Mark McSherry
Deutsche Bank agreed on Friday to buy London-based boutique investment bank Numis Corp for about £410 million in cash to unlock “a much deeper engagement with the corporate client segment in the UK.”
The transaction takes Deutsche Bank back into equities.
The German bank’s £3.50 per share offer represents a 72% premium to Thursday’s close.
Numis has recommended the offer, which comprises £3.39 in cash, an interim dividend of 6p per Numis share for the six months ended March 2023, and an additional interim dividend of 5p per share.
Anke Reingen, a London-based analyst at RBC, said: “Strategically we are surprised.”
Analysts at JPMorgan wrote: “The deal is not aligned with what shareholders want to see more of – retail-type stable earnings, more cost focus … and capital return.”
Bloomberg reported that Numis ranked third in advising on UK initial public offerings over the past five years, behind JPMorgan and Goldman Sachs Group.
The management board of Deutsche Bank and the board of Numis said in a statement they “are convinced that the transaction represents an exciting strategic opportunity to combine Deutsche Bank’s existing UK and Ireland corporate finance business with Numis to establish a leading force in UK investment banking with a prominent position across corporate broking, strategic advisory (including M&A and growth capital), equity and debt capital markets and equity research, sales and execution, and to leverage Deutsche Bank’s comprehensive and global product offering across the corporate bank and the international private bank.”
Fabrizio Campelli, Head of Corporate Bank and Investment Bank at Deutsche Bank, said: “This transaction is strongly aligned to our Global Hausbank strategy and has the potential to unlock significant value within both the Numis and Deutsche Bank franchises.
“We have been evaluating how to accelerate the growth of our business in the UK and, as a leading UK franchise with a long history of successfully delivering superior client service and growth, Numis represents a compelling strategic fit.
“The combination enables us to realise greater revenue opportunities across our shared client base and to deepen our engagement with UK corporates.
“There is strong and complementary cultural alignment between Deutsche Bank and Numis that will propel the combined business to deliver exceptional client service, and we look forward to welcoming Numis management and employees to the Deutsche Bank Group.”
Numis Chairman Luke Savage said: “The Numis Board is pleased to announce its unanimous recommendation of this cash offer for Numis, which not only represents an attractive proposition for Numis shareholders, but also provides a significant opportunity for clients, employees and wider stakeholders through this highly complementary combination.
“Numis has built one of the UK’s leading investment banking and equities franchises through an unwavering client centric culture, the quality of its people, excellence in execution and continued revenue diversification both internationally and into new business lines such as Growth Capital Solutions.
“The Numis Board is particularly pleased that Numis’ autonomy and independence are seen by Deutsche Bank as key contributors to its culture and the quality of its platform and that Deutsche Bank is focused on ensuring this is retained, while also allowing Numis to benefit from access to the significant resources of Deutsche Bank.
“Together with the strengths of Deutsche Bank, we are confident the business will be even better positioned for the future, continuing to accelerate the delivery of exceptional outcomes for all stakeholders of our business.”