Kaupthing, the Icelandic bank, has made an agreed £547m ($1bn) bid for Singer & Friedlander, the investment bank.
The offer which amounts to 316p a share is a 14 per cent premium to the S&F’s price before Kaupthing declared its was thinking of making an offer for the UK investment bank.
S&F shareholders will also receive the final dividend of 4.25p.
The acquisition by Kaupthing is latest move by cash-rich Icelandic businesses who are increasing their presence in the UK as investment opportunities in their small homeland diminish.
So far Baugur has snapped up Hamleys, Oasis, Karen Millen and Whistles as well as the Big Food Group. Bakkavor, the Icelandic food group, has agreed a £485m bid for Geest and Landsbanki has agreed to buy Teather Greenwood, the UK stockbroker.
Prior to the announcement of a possible deal Kaupthing, which is trying to extend its activities in the UK, demonstrated its interest by last year increasing its stake in S&F to 19.5 per cent.
The two banks had also started to cooperate on certain matters with S&F regularly bringing in Kaupthing in on loans above £10m.
Kaupthing said the combination of the two businesses would create a powerful provider of integrated services to small and medium sized businesses in the UK.
Sigurdur Einarsson, Kaupthing chairman, said the move was firmly in line with the bank’s international growth strategy that had London at the heart of it. “We have always said that we are a northern European bank, and as such we have to have a platform in the UK, the European financial centre.”
The bank had previously managed to organically extend its reach in the UK to a point where 17 per cent of income for 2004 was generated in the UK.
Mr Einarsson said that he would continue to look for other acquisition opportunities both in the UK and other Nordic regions. “We are still a fairly small bank and we believe that there are a lot of opportunities out there, but they would have to add value, so its finding the right fit at the right price.”
Kaupthing, which is funding the acquisition from its reserves, intends to retain the existing management team at S&F.
Tony Shearer, chief executive, will stay, as will Jonathan Spence, head of the banking division and Warwick Jones, finance director. Mr Einarsson will join as the board as chairman.
Initially the two businesses will also be run separately until the groups decide how best to combine. But Mr Shearer said that some cross-selling of products would begin almost immediately.
Kaupthing also reported first quarter results on Thursday that showed an almost quadrupling of net income from IKr3bn ($47m) to IKr11.4bn. But growth was helped by lasts year’s acquisition of FIH, the Danish corporate bank.
Net interest income doubled from IKr3.5bn to IKr7bn. Fee and net commission was up from IKr3.2bn to IKr4.4bn.
Over 60 per cent of operating income came from outside Iceland. Hreidar Már Sigurdsson, chief executive, said he expected to figure would grow to 80 per cent by the end of the year.
Last year S&F had total assets of £2.8bn, equity shareholder funds of £366m and in the year to the end of December reported pre-tax profits of £26.4m, and bank lending of £1.1bn, up 43 per cent from the previous year. The group, which also undertakes investment activities, had £3.8bn of funds under management.
S&F were advised by JPMorgan Cazenove, Kaupthing was advised by Kaupthing Limited and Deutsche Bank.
In mid morning trade S&F shares were little changed at 310¼p.
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