Stock transfer company Computershare (ASX: CPU) is rattling the tin today to raise $835 million for the acquisition of Wells Fargo Corporate Trust Services' (CTS) assets.
The funds will go most of the way in funding the $983 million acquisition of CTS, a US-based provider of trust and agency services to government and corporate clients.
CPU is singing praises of CTS, with the US company currently appointed to administer corporate trust services to approximately 26,000 mandates across a range of securities and bond issuances.
CPU says the acquisition will generate "attractive" financial returns for shareholders as CTS is able to generate growing fee income and recurring revenue streams.
"It is a clear fit with our successful Canadian corporate trust operations and existing US operations," CPU CEO Stuart Irving said.
"CTS provides scale with a top four market position, a platform for ongoing growth and increased leverage to long term growth trends and interest rates.
"We also see the potential for improved returns and margin expansion through new product developments and innovative technologies, Computershare's core competencies."
Post-acquisition, CPU expects to leapfrog to a top four position in the US corporate trust market, beating out Wells Fargo and Citibank. Just BNY Mellon, US Bancorp and Deutsche Bank would have a higher overall trustee ranking than the Australian company if the acquisition goes through.
To make the acquisition, CPU is raising $835 million at a price of $13.55 per new share, representing a discount of 9.6 per cent to the group's 23 March closing price.
Once complete, approximately 61.6 million new shares will be issued, representing 11.4 per cent of existing issued capital.Never miss a news update, subscribe here. Follow us on LinkedIn, Instagram and Twitter.
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