Financial institution BMO plans to acquire Burgundy Asset Management, a Canadian asset management company, for an estimated value of $625 million in shares.
Hop on Board with BMO's Major Acquisition
Greetings, folks! BMO (BMO.TO, BMO) has made some juicy headlines yet again. In a move to boost its wealth management prowess, they've inked a whopping deal to snag Burgundy Asset Management Ltd. for a cool $625 million, dolled out in BMO shares!
Now, here's the catch: there's a $125 million holdback reserved for Burgundy, payable only if they manage to keep a certain chunk of assets under management sixteen months after the deal's seal. What's more, an earn-out chunk could be on the table as well, pending the achievement of specific growth targets. Wait for it - the deal's scheduled to go down by the end of 2025, provided all traditional hurdles like regulatory approvals are cleared.
Once the deal's done, Burgundy will slide under the BMO Wealth Management umbrella. Snappy fella, Robert Sankey, will continue to run the show as CEO, and the founding duo, Tony Arrell and Richard Rooney, will stick around too. Established way back in 1990, Burgundy's been a force in the market, with approximately $27 billion in assets under its wing as of May 31. You'll find their team of 150 bright minds dispersed across Toronto, Vancouver, and Montreal.
So, why's BMO shelling out the big bucks? They reckon the acquisition will serve as a strategic expansion, homing in on the high-net-worth and ultra-high-net-worth client segments in Canada. It'll beef up BMO Wealth Management, fortifying its offerings in the Canadian Investment Counsel scene.
Deland Kamanga, BMO's Head Guy for Wealth Management, had this to say about the deal: "Burgundy Asset Management is one of Canada's most respected independent investment managers. Known for its top-notch team, stringent investment process, and stellar service, the acquisition will extend BMO’s reputation as a client-focused wealth manager, and expand our wealth advice and private investment counsel offering."
The behind-the-scenes action included KMS Capital, Origin Merchant Partners, and PJT Partners acting as advisors for Burgundy, while BMO Capital Markets took the lead for BMO. That's all the spill for now; stay tuned for more scoops!
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Want more context? Here are some insights:
- This strategic acquisition comes with a basic purchase price of approximately CAD 625 million, payable in BMO common shares.
- The payment structure consists of a CAD 125 million holdback, payable based on Burgundy maintaining certain assets under management (AUM) eighteen months post-closing.
- An earn-out component may also be payable in the future, contingent on meeting specified growth targets.
- The acquisition is expected to close by the end of calendar 2025, subject to regular closing conditions and regulatory approvals.
- Burgundy Asset Management boasts an impressive portfolio of approximately CAD 27 billion in AUM, with services catering to private clients, foundations, endowments, pensions, and family offices. Its team of around 150 employees operates out of offices in Toronto, Vancouver, and Montreal.
- The acquisition aims to expand BMO’s Wealth Management division, boosting its presence in the Canadian investment counsel space and enhancing its ability to serve high-net-worth and ultra-high-net-worth clients with discretionary investment management and private investment counsel solutions.
- The deal builds on BMO’s reputation as a client-focused wealth manager and complements its existing accolades, such as being named Canada’s Best Private Bank for Ultra-High-Net-Worth clients by Euromoney.
This strategic acquisition by BMO, valued at approximately CAD 625 million, is a significant move within the finance sector, aiming to expand its wealth management division and serve high-net-worth clients more effectively. The acquisition of Burgundy Asset Management, with an impressive portfolio of approximately CAD 27 billion, will fortify BMO's offerings in the Canadian Investment Counsel scene.
