Investors recoil on Julius Baer asset purchase

Michael Bow
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JULIUS Baer, the Swiss wealth manager, saw its shares plunge 7.4 per cent yesterday after announcing a new SFr750m (£490m) rights offer to help fund its purchase of Merrill Lynch’s non-US assets from Bank of America.

The firm will buy Merrill’s international wealth management firms for 1.2 per cent of the value of assets under management when the deal is completed, it said yesterday.

It predicts it will pay SFr860m for the business and the deal could add up to SFr72bn to Julius Baer’s asset base – increasing assets under management by 40 per cent.

The bank plans to fund the deal with existing capital earmarked for a share buyback plan, new share capital and the issuance of new hybrid instruments.

It will also hold a SFr500m rights issue for the deal and a further SFr250m rights issue for “future strategic flexibility”.

Chief financial officer Dieter Enkelmann said: “For our shareholders the acquisition represents a substantial investment in our future growth.”