US-based Nuveen, the global fund manager with $1.4 trillion in assets under management, said it agreed to acquire London-based Schroders, which has $1.1 trillion in assets under management, for up to £9.9 billion in cash.
Under the terms of the transaction, Schroders shareholders would receive a total value of up to £6.12 per Schroders share.
This comprises cash of £5.90 per Schroders share and “permitted dividends” of up to 22p per Schroders share.
The cash consideration represents a premium of 29% to the closing price of £4.56 per Schroders share on February 11.
It is expected that for at least 12 months following the completion of the transaction, the Schroders group will continue to operate as a standalone business within the wider Nuveen group.
“The Schroders brand will be retained and London will serve as the Combined Group’s non-US headquarters and largest office, with c.3,100 professionals,” said the companies.
“The Combined Group expects to deliver significant benefits to the UK as a global financial centre, enabling more long-term capital to be channelled into the economy by deepening the pool of investment capital, while reinforcing London’s role in global asset and wealth management.
“Schroders remains committed to supporting the UK capital markets and, in the event that Nuveen and Bidco were to consider an initial public offering of Schroders or the Combined Group in future, Nuveen and Bidco would (subject to an appropriate analysis at the time) intend to list on the London Stock Exchange as one of the dual listing venues.”
Nuveen, a TIAA Company, said: “This transaction will create one of the largest active global asset management firms, with nearly $2.5 trillion of assets under management.
“The combined group will operate with significant scale and capabilities in the world’s largest financial centers with a presence in more than 40 markets in total.”
Nuveen CEO William Huffman said: “Through this exciting and transformational step for both of our distinguished firms, we look forward to welcoming Schroders into the Nuveen family.
“By bringing our complementary platforms, capabilities, distribution networks, and cultures together, we will create an extraordinary opportunity to enhance the way we serve our collective clients through access to new markets, bolstered product offerings, and deeper pools of investment talent.
“This transaction is about unlocking new growth opportunities for wealth and institutional investors around the world by giving our leading, differentiated public-to-private platform a broader global presence.”
Schroders CEO Richard Oldfield said: “In a competitive landscape where scale can help deliver benefits, in Nuveen we see a partner that shares our values, respects the culture we have built and will create exciting opportunities for our clients and people
“The transaction will significantly accelerate our growth plans to create a leading public-to-private platform with enhanced geographic reach and a strengthened balance sheet. Together, we can create an exceptional opportunity to provide clients with a true breadth of high-quality solutions to meet their evolving needs.”
Schroders will continue to be led by CEO Oldfield, who will report to Nuveen CEO Huffman, and become a member of the Nuveen executive management team.
Nuveen added: “The Schroders’ Principal Shareholder Group Trustee Companies, which comprise four private trust companies which act as the trustees of various trusts settled by certain members of the Schroder family, have entered into irrevocable undertakings to vote in favor of the Transaction at the upcoming Schroders shareholder meeting in respect of their aggregate holding of approximately 41% of Schroders shares.”