Scotiabank purchases MD Financial for nearly $2.6B
TORONTO Bank of Nova Scotia said Thursday that it will buy the Canadian Medical Association’s wealth management firm for nearly $2.6 billion.
Canada’s third-largest lender said it would fund a portion of the purchase of MD Financial Management — which was launched in 1969 and has more than $49 billion in assets under management and administration — with a $1.5-billion public offering of 19.7 million common shares of Scotiabank at $76.15 apiece.
The deal is still subject to regulatory sign-offs and closing conditions, a release noted, and is expected to close in the fall.
Brian Porter, president and CEO at Scotiabank, said during a conference call Thursday that the lender’s proposed $2.585-billion cash purchase of MD Financial would give the bank the “largest private investment counsel business in Canada.”
“We believe that there are significant opportunities to deepen MD client relationships through Scotiabank’s leading retail, small business and private banking products and services,” Porter said, adding that they expect the deal to be accretive on an earnings per share basis in year three, excluding integration and amortization costs.
Scotiabank’s purchase of MD Financial follows its approximately $950-million acquisition of independent investment firm Jarislowsky Fraser earlier this year, another move aimed at beefing up Scotia’s wealth management business.
The two purchases, Scotiabank predicted, adds an extra $78 billion in assets under management, pushing up its total Canadian banking assets under management to more than $230 billion.
Scotiabank and the CMA, which represents about 85,000 doctors and doctors-in-training, said they would enter into a 10-year partnership when the deal closes, which would see the doctor’s group exclusively promote Scotiabank to physicians as the financial product provider of choice.
Porter had noted just days earlier, during the bank’s secondquarter conference call, that the bank’s strong financial position put it in a position where it could grow via acquisitions.
MD Financial will be a standalone brand within Scotia Wealth Management, according to the bank, with its current employees and management team remaining in place. .