Gluskin Sheff + Associates Inc., a wealth management firm serving high net worth private clients and institutional investors, is buying fixed income specialist, Blair Franklin Asset Management Holdings Inc., in a $71.8 million deal. The firms are based in Toronto.
Gluskin Sheff (TSX:GS) Monday announced a deal to acquire Blair Franklin for $15 million in cash plus 1.9 million common shares, which puts the value on the overall deal at about $71.75 million based on Gluskin Sheff’s latest closing price of $29.87.
The transaction is subject to certain closing conditions, including the approval of the Toronto Stock Exchange and other regulatory approvals, which the firms say are expected in the third quarter.
Boutique asset manager Blair Franklin specializes in fixed income, and has approximately $625 million in assets under management.
The deal is expected to be accretive to Gluskin Sheff’s earnings per share in the first year, excluding amortization and any non-recurring items arising from the transaction.
Under the terms of the transaction, 712,500 of the shares will be issued to the sellers at closing, which will be subject to a minimum one-year holding period. The remaining 1,187,500 shares will be held in escrow for two years and are subject to claw-back pursuant to a purchase price adjustment based on the assets under management at the end of this period.
Following the closing, and subject to regulatory approval, Peter Zaltz, Blair Franklin’s chief investment officer, will become executive vice-president & head of fixed income and will be appointed to Gluskin Sheff’s management committee, and Thomas MacMillan, chair of Blair Franklin, will be appointed to the company’s board.
“Adding the talents and portfolio offerings of the Blair Franklin team to our own outstanding team enhances our global capabilities and broadens the ways in which we can earn strong risk-adjusted returns for our clients in the fixed income markets,” said Jeremy Freedman, president & CEO of Gluskin Sheff, in a release.