Rathbones abandons its plans for £2bn tie-up

A £2BN merger between two wealth managers has been called off.

Listed business Rathbone Brothers sought to buy privatelyowned rival Smith & Williamson, which would have created a major new player overseeing £56bn of customers’ assets.

But after announcing talks last week, Rathbones said the deal would not go through and would take a £5m hit from the costs of the failed attempt.

In a statement after markets had closed last night, chief executive Philip Howell said: ‘The combination was intended to accelerate Rathbones’ existing strategy, but ultimately we were unable to agree terms that offered our shareholders an appropriate balance of risk and reward.’

The firm did not say why talks had collapsed, but the statement suggests Smith & Williamson’s owners demanded more than Rathbones’ offer. Analysts expected the private firm to be valued at £ 600m, making a combined group worth around £2bn.

Earlier this week it was rumoured that rival Tilney was trying to gatecrash the merger, but that Smith & Williamson bosses preferred the offer from Rathbones.