Royal Bank of Canada and BlueBay Asset Management have reached an agreement on terms for a recommended acquisition of BlueBay by RBC.

Under the terms of the acquisition, BlueBay shareholders will be entitled to receive 485 pence in cash for each BlueBay share. This represents a premium of 29 per cent to the last closing price of BlueBay shares as at 15 October 2010.

The acquisition values the issued share capital of BlueBay at approximately GBP963m (CAD1.56bn).

It is expected that the acquisition will be implemented by way of a court-approved arrangement and that formal documentation will be sent to BlueBay shareholders in November 2010.
 
The board of BlueBay has unanimously recommended that its shareholders vote in favour of the acquisition. It is anticipated that, subject to the satisfaction of all regulatory and other conditions, the acquisition will close by the end of December 2010.

The transaction will be funded using RBC’s existing cash resources and is not expected to have a material impact on RBC’s earnings per share in the near term.
 
BlueBay is one of Europe’s largest independent managers of fixed income debt funds and products, with USD40bn in assets under management on behalf of institutional and high net worth investors in the UK, Europe, the US, the Middle East, Asia and Australasia.

Based in London, BlueBay manages a combination of long-only and alternative investment strategies across the sub-asset classes of fixed income credit, primarily focused on European and emerging markets strategies

BlueBay will retain its investment autonomy and related operational independence following the acquisition. The 220 employees of BlueBay will become members of RBC’s Global Asset Management business.
 
“This acquisition will further RBC’s strategy to leverage our position as a top 10 global wealth manager, and continue to expand our asset management solutions for the benefit of our clients around the world,” says George Lewis, group head, RBC Wealth Management. “BlueBay is an ideal fit with RBC’s growing asset management business and we are confident that this transaction will benefit clients, employees and shareholders of both firms.”
 
“Our board is unanimously recommending this combination with RBC because of the clear benefits it affords the firm’s shareholders, clients and employees,” says Hans-Jörg Rudloff, chairman of BlueBay.