RBC to spend $1.5B to acquire Britain's BlueBay

Royal Bank of Canada said Monday it plans to spend more than $1.5 billion to acquire British-based BlueBay Asset Management.

Under the terms of the acquisition, BlueBay shareholders would receive 485 pence in cash for each BlueBay share, a29 per cent premium over the last closing price of BlueBay shares of 375.70 pence last Friday.

It is expected that the $1.56-billion acquisition will be implemented by way of a court-approved arrangement and that documents will be sent to BlueBay shareholders in November.

The board of BlueBay has unanimously recommended that its shareholders vote in favour of the acquisition, expected to close by the end of December.

The transaction will be funded using RBC's existing cash resources, and is not expected to have a material impact on RBC's earnings per share in the near term.

BlueBay is one of Europe's largest independent managers of bond funds and products, with $40 billion USin assets under management.

"This acquisition will further RBC's strategy to leverage our position as a top 10 global wealth manager, said George Lewis, group head, RBC Wealth Management.

"BlueBay is an ideal fit with RBC's growing asset management business and we are confident that this transaction will benefit clients, employees and shareholders of both firms."

The acquisition plan comes after Royal Bank said last month it would expand its global wealth management business.

"RBC's strength and stability make it an ideal partner for BlueBay," said Hugh Willis, CEO of BlueBay.

"Its commitment to its clients and its high standards of business practices mirror our own and lie at the heart of the excellent cultural fit between our firms. We greatly look forward to working together in providing our clients with world class investment solutions."