Rothschild Family Offers To Take Flagship Bank Private In A $4 Billion Deal

According to a spokeswoman of the Paris-based company Rothschild & Co., the family is offering to take the flagship bank private in a $4 billion deal.

The renowned Rothschild family, whose combined riches are reportedly among the biggest fortunes in history while being largely hidden, intends to take its main investment firm, Rothschild & Co, private. The bank stated on Monday that its largest shareholder intends to launch a tender offer that will value the company at roughly €3.7 billion, or $4 billion. The bank’s predecessors assisted in financing the Duke of Wellington’s defeat of Napoleon at the Battle of Waterloo in 1815.

According to a spokeswoman, the decision, which comes at a time when many of its competitors are taking the other course and seeking public financing, would end public ownership of a company that has been listed since 1838 in some capacity. After the 2012 restructuring that effectively merged the French and British firms under one roof and streamlined the organizational structure, Bloomberg writes that the private acquisition will be the next stage in the family’s efforts to solidify control.

The Paris-based company, like the majority standalone modern investment banks, makes the majority of its money from financial advisory services provided to what might as well be called the world’s deepest rolodex, though it also operates a wealth and asset management division and a merchant banking operation. Since Alexandre de Rothschild, 42, took over as CEO in 2018 (whose great, great, great, great grandfather is Mayer Amschel Rothschild, founder of the Rothschild dynasty), the bank has been growing in the US and has largely avoided the deal advisory market downturn, placing sixth in terms of the volume of mergers and acquisitions last year, according to Bloomberg.

Global advising, wealth and asset management, and commercial banking are the three departments of Rothschild & Co. At a time when so many of its colleagues are struggling to generate advisory money, Concordia, a holding company for the family, smugly said in a statement that “None of the businesses of the group needs access to funds from the public equity markets.” Additionally, rather than focusing on immediate profits, it is more appropriate to evaluate each company’s performance over the long term. Because of this, private ownership of the group is preferable to a public listing.

The ambition of the Rothschild family to take their boutique company private runs opposite to the trend of the previous two decades, when a wave of smaller advisory firms sought public listings in the US, including Evercore and Lazard.

In order to acquire the remaining shares, Concordia, the family holdings company of the Rothschilds, which now holds 38.9% of the company’s stock and 47.5% of the voting rights, said it expected to offer €48 per share, a premium of 19% over Friday’s closing price. Shares of Rothschild increased 17% to €47.

Three months after Evelyn de Rothschild, the previous head of the banking group’s British division, passed away at age 91, the going-private plan was announced. The two branches were combined by Evelyn and his cousin David de Rothschild, who controlled the French arm. This action was considered a crucial one for maintaining competitiveness. After his cousin Evelyn retired in 2004, David assumed managerial responsibility for the U.K. portion of the company. The lender’s center of influence shifted even further towards Paris under his direction and that of his son. According to Rothschild’s annual report, Eric de Rothschild possesses 55.6% of Concordia’s voting rights, compared to David de Rothschild’s side of the family’s 39.42%.

When David de Rothschild stood down and handed the reins to his son Alexandre, who became the seventh generation of the family to run the bank, there was a changing of the guard at the institution four years ago. It has worked to diversify under the younger de Rothschild’s direction from its primary French and British consulting business by developing in the US, where it has historically struggled, and by entering the private equity sector.

In order to complete the financing of the agreement, Concordia stated that it is now in advanced negotiations with investors and banks. It plans to submit its bid by the end of the first half of 2023 if the negotiations are successful.

On May 25, Rothschild & Co. announced that it would distribute a €1.4 dividend to shareholders at its next annual general meeting. Should Concordia choose to submit its offer, the company will also suggest an unusual dividend of €8. These amounts would be deducted from the offer’s price.

The FT claims that Rothschild & Co. was involved in some of the largest transactions in Europe over the past year, including the nationalization of German energy company Uniper, the merger of satellite operators Eutelsat and OneWeb, Covéa’s $9 billion purchase of Partner Re, Volkswagen’s initial public offering of Porsche, and Covéa’s $9 billion purchase of Partner Re. Its Q3 sales of €864 million increased 30% over the same period last year. Its largest company, worldwide advisory, saw an 18% year-over-year revenue growth to €547 million during that time. The group issued a warning that given the macroeconomic and geopolitical climate, 2023 was probably going to be a more difficult year.

Rothschild & Co said in a statement that it had “taken note of the proposed transaction” and had recruited financial advisor Finexsi, based in Paris as an independent expert to deliver a fair opinion.

Recently, Sir Evelyn De Rothschild, who was knighted by the Queen in 1989 for his contributions to banking and finance and is largely regarded as one of the top financiers and philanthropists of his time, died at the age of 91.

Mayer Amschel, who initially began by purchasing and selling used coins in a Frankfurt shanty, formed the Rothschild company. He sent his five sons to build Rothschild bases in London, Paris, Naples, Vienna, and Frankfurt in the early 1800s. He was prosperous, and now his family is deeply and widely involved in almost every facet of international banking.

Branches of the family have been at odds with one another over the name Rothschild for many years. The company and financial manager Edmond de Rothschild (Suisse) SA, which is run by a distinct branch of the family, reached a long-standing agreement in 2018 over the use of the name. The two businesses agreed to dissolve their cross-shareholdings as part of that agreement.