Julius Baer today said it will acquire Merrill Lynch’s International Wealth Management business based outside the US for 860 million Swiss franc, a move that will boost its presence in key growth markets in Asia, Latin America and the Middle East.

The transaction is estimated to increase Julius Baer’s existing asset under management by around 40 per cent to 251 billion Swiss francs and its total client assets to 341 billion francs at the end of the two-year integration period, the Swiss private banking group said in a statement.

“This transaction represents a rare opportunity to acquire an international pure-play wealth management business of significant size and will add substantial scale to our business in Europe and in key growth markets in Asia, Latin America and the Middle East,” Julius Baer Group Chairman Daniel J Sauter said.

After integration, Julius Baer will be present in more than 25 countries and 50 locations globally including new locations like Bahrain, the Netherlands, India, Ireland, Lebanon, Luxembourg, Panama and Spain.

Merrill Lynch’s International Wealth Management business has 81 billion Swiss francs worth of assets under management (AUM) as of June 30 2012 and over 2,000 employees, including more than 500 financial advisers.

The acquisition is expected to be earnings accretive from the first full steady-state year following integration. Julius Baer has an EPS accretion target of 15 per cent in 2015.

“For our shareholders the acquisition represents a substantial investment in our future growth,” Julius Baer CFO Dieter A Enkelmann said, adding that “the resulting geographic diversification is expected to significantly reduce Julius Baer’s net currency exposure to the Swiss franc.”

The transaction is expected to be funded by a combination of up to 530 million Swiss franc from existing excess capital, while 240 million Swiss franc worth of shares will be issued to BofA as part of the consideration.

Julius Baer would raise 200 million franc from the issuance of new hybrid instruments.

As part of the integration, the acquired legal entities will operate under the brand Julius Baer, Julius Baer said.

Moreover, Julius Baer and BofAML have entered into an agreement whereby BofAML will provide certain products and services to Julius Baer, including the provision of global equity research, product offerings, as well as structured and advisory products. In addition there will be cross-referral of clients between both organisations, it said.

Published on August 13, 2012