After decades in public markets, the Rothschild dynasty — one of the most storied names in banking — has decided its flagship bank is best in private hands.
Rothschild & Co., whose predecessors helped finance the Duke of Wellington's victory over Napoleon in 1815 at the battle of Waterloo, announced Monday that its main shareholder plans a tender offer valuing the firm at about €3.7 billion ($4 billion).
The move, at a time when many rivals are going the opposite route, would end public ownership of a firm that in one form or another has been listed since 1838, according to a spokeswoman. It marks a further step in the family's efforts to cement control, after a 2012 reorganization effectively brought the French and British businesses under one roof and simplified the organization structure.
The Paris-based firm generates the majority of its revenue from providing financial advisory, though it also has a wealth and asset management unit as well as merchant banking business. Led by Alexandre de Rothschild since 2018, the bank has been expanding in the U.S. and managed to sidestep much of the slump in the market for deal advisory, ranking sixth by the number of mergers and acquisitions last year.
"None of the businesses of the group needs access to capital from the public equity markets," Concordia, a holding company for the family, said in a statement. "Furthermore, each of the businesses is better assessed on the basis of their long-term performance rather than short-term earnings. This makes private ownership of the group more appropriate than a public listing."
Concordia said it expects to offer €48 a share, a premium of 19% over the closing price on Friday. Concordia already owns 38.9% of the firm's shares and 47.5% of the voting rights. Rothschild's shares rose 17% to €47 at 3:38 p.m. in Paris trading.
The going-private plan comes three months after Evelyn de Rothschild, the former head of the British arm of the banking group, died at age 91. Evelyn and his cousin David de Rothschild, who oversaw the French arm, united the two branches in a move that was seen as a key step in remaining competitive. David took managerial control of the U.K. side of the business in 2004 after his cousin Evelyn retired.
Under his leadership and that of his son, the center of power at the lender moved further to Paris. David de Rothschild's side of the family has 39.42% of Concordia's voting rights, while his cousin Eric de Rothschild's has 55.6%, according to Rothschild's annual report.
Concordia said it's currently in advanced negotiations with investors and banks to finalize the financing of the deal. If the talks are successful, it intends to file its offer by the end of the first half of 2023.
Rothschild & Co. said it plans to offer a €1.4 dividend to shareholders at its next annual general meeting on May 25. The firm will also propose a €8 exceptional dividend, should Concordia decide to file its offer. The price of the offer would be adjusted downwards by those amounts.
The Rothschild firm was founded by Mayer Amschel, who started out buying and selling old coins in a Frankfurt ghetto. In the early 1800s, he sent his five sons to establish bases of Rothschild in London, Paris, Naples, Vienna and Frankfurt.
The Rothschild name has been the center of dispute between branches of the family for years. In 2018, the firm settled a long-running disagreement with the wealth manager Edmond de Rothschild (Suisse) SA, which is managed by a different branch of the family, over the use of the name. As part of that deal, the two companies agreed to unwind their cross-shareholdings.
— With assistance from Tara Patel.
