The Rothschild family’s plan to buy out other investors in Paris-listed Rothschild & Co remains on track, the company and buyout vehicle Concordia said last week, as the listed entity reported a 10% fall in first-quarter revenues to €606m as M&A advisory fees remain weak.
The tender offer was announced on February 13 with a planned completion by “mid-2023”. Concordia said that remained the intention, and shareholders will receive an exceptional dividend of €8 a share when the proposal is cleared by French market regulator AMF.
They will receive an ordinary divided of €1.40 a share on May 31. The offer price will be set at €46.60 per share, but since the €8 exceptional dividend will already have been declared, shareholders will effectively receive only €38.60 per share at the close of the transaction.
Concordia said it would buy up to 30% of the shares it does not already own at €46.60 each after Rothschild & Co issued a formal response to its offer but before the tender offer opened, following AMF clearance, when the €8 exceptional dividend is to be paid.
Concordia already owns 55% of the outstanding shares.
Weak M&A
Rothschild’s global advisory business suffered in the first quarter in line with the wider market, with revenues falling 21% from a year earlier to €327m. M&A revenues fell 29% to €219m, a worse performance than financing advisory, where revenues rose 4% to €108m. The latter business includes debt advisory and restructuring.
The business is advising Melrose on the £4.5bn spinout of Dowlais and Brazilian retailer Americanas on an US$8bn restructuring.
Rothschild has now taken full control of equity research business Redburn and will merge it with US business Atlantic Equities to create Redburn Atlantic, expected to complete during the third quarter.
Rothschild said it expects the “significantly weaker” M&A market in the first quarter to continue for the rest of the year, particularly following the recent volatility in the banking sector.
“Deal activity for the rest of 2023 will be impacted by level of capital markets activity, availability of financing, valuation expectations and CEO confidence, and so there remains significant uncertainty for the remainder of the year,” the firm said.
It said that there are “meaningful levels of pent-up demand, should market conditions improve” but the firm remains “cautious in assessing the outlook for the rest of the financial year”.