The transaction is scheduled to close in the fourth quarter of 2023, subject to certain circumstances such as shareholder approval and regulatory clearances.
Numis stockholders will get 350 pence per share under the agreed-upon conditions, valuing the company at around GBP 410 million. Numis' largest shareholder has given Deutsche Bank an irrevocable pledge to vote in favour of the acquisition.
The Management Boards of Deutsche Bank and Numis feel that the deal provides a strategic opportunity to merge the bank's corporate finance business in the UK and Ireland, with Numis to develop a force in the UK investment banking industry.
The deal will help Deutsche Bank to advance its Global Hausbank strategy by expanding its involvement with the corporate customer group in the UK.
Numis is a corporate broking and advisory firm in the UK that provides strategic advice and capital market access to 166 retained corporate broking customers, including 64 in the FTSE 350.
The surprising acquisition is Deutsche's largest in more than a decade, and it represents an unusual move for its global investment bank, which has been searching for planned expansion following years of cutbacks as Germany's largest lender looked to recover from losses.
The transaction had been discussed between the two parties for some months. Deutsche views it as a chance to expand further into Europe's largest investment banking fee market. It also plans to grow its company by providing a greater range of services to Numis clients, especially in overseas markets.
However, Deutsche had to defend a transaction that appeared to reverse its withdrawal from equities trading. The bank shuttered its equities trading division in 2019 as part of a major restructuring that resulted in the loss of 18,000 jobs.
Deutsche's shares fell 1%, bringing their year-to-date drop to 11%. The bank is valued at 0.28 times its book value of assets, which is among the lowest of any bank in Europe.
The acquisition comes as the UK market experiences a sharp decrease in initial public offerings and stock raisings, which are vital to companies like Numis. Profits fell by more than 70% in 2022 due to a lack of IPOs and a slowdown in other capital market activities.
As a result, if the UK is to halt a steep decrease in the City of London's initial public offerings, it must rethink its approach to CEO compensation, stock market risk, and other 'cultural issues'.
According to Refinitiv statistics, London received only four IPOs in the first quarter, marking the city's sixth-worst quarter for listings since 1995. The downturn started much earlier, with London accounting for only 5% of worldwide IPOs between 2015 and 2020.
The worldwide situation, on the other hand, was not much better. In 2022, there were 1,333 IPOs worldwide, raising USD 179.5 billion, a 45% decrease in terms of the number of IPOs and a 61% decrease in terms of proceeds compared to 2021.
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