Canaccord buying UK firm

Canaccord Financial has inked a deal to buy UK-based Collins Stewart Hawkpoint, an independent financial advisory group with around 850 employees, operating in corporate advisory, corporate broking, securities and wealth management.

“The acquisition of Collins Stewart Hawkpoint will be a transformational expansion of our business and will firmly position Canaccord as a leading global investment bank,” said Paul Reynolds, president and CEO of Canaccord Financial Inc.

The proposed deal will significantly expand Canaccord’s capital markets operations in the U.K. and U.S., and will give the company a foothold in Singapore.

“When the transaction closes, Canaccord will have operations in twelve countries and capabilities to list companies on ten stock exchanges,” says Reynolds. “Our clients will benefit from an expanded service offering and growing global coverage of our sixteen focus sectors. And we believe our shareholders will benefit from the steady, recurring revenue stream from our new UK and Europe-based wealth management business, while leveraging Canaccord’s strong capital markets position for the eventual market recovery.”

Collins Stewart Hawkpoint’s services cover institutional stockbroking, UK, European and US research, fixed income credit trading, corporate broking, corporate finance advisory services, debt capital markets advice, restructuring and debt advisory services, private client and intermediary wealth management and fund management.

“We are among the strongest and most international mid-market players in our respective markets and so it makes perfect strategic sense to combine forces. Both businesses are highly entrepreneurial and the cultural fit is good,” said Mark Brown, CEO of Collins Stewart Hawkpoint plc. “The Board believes that the offer provides an attractive valuation for Collins Stewart Hawkpoint’s shareholders and gives them the opportunity to share in the future success of the enlarged group.”

Upon closing of the deal, Brown will be appointed CEO of Canaccord Genuity Limited, giving him overall oversight and management responsibility for Canaccord’s operations in the UK, Europe and Asia Pacific.

Tim Hoare will be appointed chairman of Canaccord Genuity Limited. Neil Darke will remain CEO of the Collins Stewart Hawkpoint wealth management business.

Canaccord says it will offer 57.6 pence in cash and 0.07 of a Canaccord share for each share of the London-based financial advisory group, valuing the acquisition at roughly $406 million. The offer represents a hefty 90% premium to Collins Stewart closing price on Wednesday.

Canaccord stock was halted from trading on the Toronto Stock Exchange ahead of the announcement Thursday. When they resumed trading, Canaccord shares fell 52 cents or more than 6% to $7.98 on the Toronto Stock Exchange. Collins Stewart shares jumped 39.5 pence or 78% to 90 pence on the London Stock Exchange.

Collins Stewart Hawkpoint directors say they intend to unanimously recommend that shareholders vote in favour of the deal.

The transaction is expected to close in the calendar first quarter of 2012. At that time Collins Stewart Hawkpoint’s businesses will be integrated into Canaccord’s operations.

Canaccord plans to move its UK stock exchange listing from the AIM market to the LSE main market, a process which should be completed by June 30, 2012, pending approvals.

Completion of the transaction is subject to, among other things, regulatory, merger control, and Toronto Stock Exchange approvals, as well as other normal-course acquisition conditions.

Canaccord Financial is a leading independent, full-service financial services firm, with operations in two principal segments of the securities industry: wealth management and global capital markets. Since its establishment in 1950, Canaccord has been driven by an unwavering commitment to building lasting client relationships.

Canaccord has 49 offices worldwide, including 32 Wealth Management offices located across Canada. Canaccord Genuity, the international capital markets division, operates in Canada, the U.S., the U.K., China, Hong Kong, Australia and Barbados.