Daiwa acquires Close Brothers CF for £75m

Daiwa Securities SMBC Europe, the European subsidiary of Japanese investment bank Daiwa Securities SMBC Co, has agreed to acquire Close Brothers Corporate Finance from Close Brothers Group plc in a deal valued at £75m.

Close Brothers will contribute £8m of working capital to the corporate finance business, with Daiwa SMBC providing the cash balance of £67m.

Close Brothers Corporate Finance will continue to trade under its existing name for up to 12 months and will work as a standalone business in alliance with Daiwa SMBC's other international corporate finance operations. The unit will report to the board of directors of Daiwa Securities SMBC Europe Limited.

Discussions for the deal began in autumn 2008 when Daiwa SMBC was looking to expand its corporate advisory business in Europe. The investor believes that its international operations and its alliance with US-based Sagent Advisors helped it to win the deal.

Daiwa SMBC was attracted to Close Brothers Corporate Finance because of the company's strong presence in the European market, which the Japanese investment bank believes will increase its European business and revenues as well as diversify its earning streams. Daiwa SMBC also hopes that the transaction will further develop its service areas and facilitate cross-border deals. The acquisition is subject to regulatory approval and is expected to complete by the end of August 2009.

London-based Close Brothers Corporate Finance, a business which was formed in 1997, offers advice in mergers and acquisitions, restructuring, debt advisory, financial sponsors coverage, pensions and IPO advisory. The company employs more than 200 people across its offices in London, Manchester, Paris, Lyon, Madrid, Barcelona, Frankfurt and Zurich. For the year ending 31 July 2008, the company had profits after tax of £4.7m and total assets of £58.4m. In the six months to 31 January 2009, Close Brothers Corporate Finance reported a loss of £2.6m after tax.

Ikuo Mori, previously senior managing director and head of international operations at Daiwa Securities SMBC Co, will become chairman of Close Brothers Corporate Finance. Stephen Aulsebrook will remain chief executive of the corporate advisory company.

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