City frets that Rathbones’ tilt at Scottish wealth manager could prove too costly

Takeover battle: Speirs & Jeffrey is based in Glasgow and could be worth up to £200 million

Rathbone Brothers today confirmed takeover talks for Scottish wealth firm Speirs & Jeffrey but City analysts say the deal “looks expensive”.

The wealth manager is reportedly up against private-equity firm Permira, which owns Rathbones’ rival Tilney, in the £200 million race.

“On the face of this, it looks to be slightly expensive and our view would be that it is likely Permira could outbid Rathbones,” said Liberum analyst Justin Bates.

Shore Capital’s Paul McGinnis also said the £200 million price tag “looks expensive”.

The deal would value Glasgow-based Speirs & Jeffrey at nearly 28 times earnings — against a valuation in the sector of between 15 and 20 times.

Speirs has a margin of 35%, considered high even by the lucrative margins of the wealth management sector.

The group posted turnover of £25.3 million and profits of £9 million for the year ending May 2017.

Rathbones said it “regularly assesses various acquisition opportunities in line with its stated strategy, and confirms that discussions between Rathbones and Speirs & Jeffrey in relation to a possible acquisition are taking place.”

Shares in Rathbones rose 12p, or 0.5%, to 2386p.