After decades in the public markets, the Rothschild dynasty, one of the most famous names in banking, has decided that its flagship bank is better in private hands.
Rothschild & Co., whose predecessors helped finance the Duke of Wellington’s victory over Napoleon in 1815 at the Battle of Waterloo, announced Monday that its largest shareholder plans a public offering valuing the company at about 3.7 billion euros ($4 billion). Dollars).
The move, at a time when many rivals are going the other way, would end public ownership of a company that has been listed in one form or another since 1838, according to a spokeswoman. It marks another step in the family’s efforts to cement control, after a 2012 shakeup effectively brought the French and British companies under one roof and simplified the organization’s structure.
The Paris-based firm generates most of its income by providing financial advice, though it also has a wealth and asset management unit, as well as commercial banking businesses. Led by Alexandre de Rothschild since 2018, the bank has been expanding in the US and managed to weather much of the downturn in the deal advisory market, ranking sixth by the number of mergers and acquisitions last year. .
“None of the group’s businesses need access to capital from the public stock markets,” Concordia, a family holding company, said in a statement. “In addition, each of the companies is best evaluated on the basis of its long-term performance rather than short-term earnings. This makes private ownership of the group more appropriate than a public listing.”
Concordia said it expects to offer 48 euros per share, a 19% premium over Friday’s closing price. Concordia already owns 38.9% of the company’s shares and 47.5% of the voting rights. Rothschild shares rose 17% to 47 euros at 3:38 p.m. in Paris trading.
The privatization plan comes three months after Evelyn de Rothschild, a former head of the British arm of the banking group, died aged 91. Evelyn and her cousin David de Rothschild, who oversaw the French arm, brought the two branches together in a move that was seen as a key step in staying competitive. David took over management of the UK side of the business in 2004 after his cousin Evelyn retired.
Under his and his son’s leadership, the moneylender’s center of power moved to Paris. David de Rothschild’s side of the family has 39.42% of Concordia’s voting rights, while his cousin Eric de Rothschild’s has 55.6%, according to Rothschild’s annual report.
Concordia said it is currently in advanced negotiations with investors and banks to finalize the financing of the deal. If the talks are successful, it intends to submit its offer by the end of the first half of 2023.
Rothschild & Co. said it plans to offer a dividend of 1.4 euros to shareholders at its next annual general meeting on May 25. The firm will also propose an exceptional dividend of 8 euros, in case Concordia decides to present its offer. The offer price would be adjusted downward by said amounts.
The Rothschild firm was founded by Mayer Amschel, who started out buying and selling old coins in a Frankfurt ghetto. In the early 19th century, he sent his five sons to establish Rothschild bases in London, Paris, Naples, Vienna, and Frankfurt.
The Rothschild name has been the center of contention between branches of the family for years. In 2018, the firm settled a longstanding disagreement with wealth manager Edmond de Rothschild (Suisse) SA, which is managed by a different branch of the family, over use of the name. As part of that deal, the two companies agreed to divest their cross-shareholdings.
— With the help of Tara Patel.
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