Scotiabank ups wealth management with Dundee deal
By Cameron French and Pav Jordan
TORONTO (Reuters) - Bank of Nova Scotia, Canada's third largest lender, has agreed to buy the 82 percent of DundeeWealth it does not already own for C$2.3 billion ($2.25 billion), giving a significant boost to its domestic wealth management presence.
Scotiabank's offer of C$21 a share drove up the stock of DundeeWealth and parent Dundee Corp by 6.6 and 5 percent respectively on Monday.
The deal comes as Scotiabank pushes to expand its global presence in wealth management, which offers lucrative fees as well as exposure to rebounding stock markets.
The bank will become Canada's No. 5 wealth manager, with a 7.8 percent market share after the takeover, it said. DundeeWealth sells mutual funds under the Dynamic Funds banner, and is currently Canada's No. 8 mutual fund manager.
"Scotia historically doesn't have the scale that the other Canadian banks have, so this acquisition certainly puts them up there," said Scott Chan, an analyst at Canaccord Genuity.
Scotiabank also owns 36 percent of CI Financial, Canada's No. 3 asset manager, and the bank has been seen as a likely buyer for the rest of CI.
Analysts said CI was still a likely target, but said the DundeeWealth deal could put that move on the back burner for now.
Chris Hodgson, head of Scotiabank's global wealth management arm, said his priority was to deal with the Dundee acquisition, but denied a takeout of CI was "off the books". Continued...