Computershare picks up Wells Fargo acquisition
Computershare told investors that it has entered into an agreement to acquire the assets of Wells Fargo Corporate Trust Services (CTS), a leading US-based provider of trust and agency services to government and corporate clients.
CTS is currently appointed to administer corporate trust services to ~26,000 mandates across a range of securities and bond issuances, enabling the business to generate growing fee income and recurring revenue streams.
Computershare sees CTS as a highly strategic fit with the company's existing Canadian and US corporate trust operations and its growth strategy. The combination is expected to accelerate Computershare’s position in the US corporate trust market to a top 4 position.
With enhanced scale, Computershare hopes the acquisition will provide greater exposure to positive, long term structural growth trends in trust and securitisation products. Client deposit balances and money market fund balances of over US$60bn will also transfer across as part of the acquisition.
The acquisition is expected to generate attractive financial returns for shareholders, with the purchase price of US$750m represented an EV/LTM EBITDA acquisition multiple of 8.9x (pre synergies). It is also expected to be at least 15% Management EPS accretive on a pro forma FY21 basis including full run-rate synergies.
The purchase will be funded through a combination of debt and equity, with Computershare also announcing the launch of an $835m capital raise.
Computershare’s CEO Stuart Irving said, “We are delighted to announce the acquisition of Wells Fargo Corporate Trust Services. It is a clear fit with our successful Canadian corporate trust operations and existing US operations. 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."