Close Brothers Targets For Smaller Cenkos

by Stewart Douglas

Story link: Close Brothers Targets For Smaller Cenkos

Distinguished investment bank Close Brothers have today announced receipt of an offer from rival bank Cenkos to acquire their business to the value of £1.1 billion, despite the fact that Close Brother have a substantially larger market capitalisation.

Cenkos was founded two years ago in 2005 by investment banker Andy Stewart, following his split from partner Leigh Collins and their previous firm Collins Stewart, which profited from privately backed investments.

Close specialises in market making, where they agree to buy certain shares and sell certain shares to order on the market.  However with the higher risk of acquiring failing shares the bank has seen its profits suffer over recent years despite strong capitalisation.

The contingent offer, premised on financial analysis, is around 760p per share, which it is thought will total in excess of £1 billion.  Cenkos however, is valued significantly lower than Close Brother who have roughly 10% of the level of market cap.

The share value at the end of trade today saw the company fall back to the rates of 1998, as a result of ongoing weak performance by the bank particularly with the turbulence on the stock exchanges as a result of the sub-prime crisis.

UK banks and equity firms have struggled on the whole over the last few years as a result of a volatile FTSE and straining foreign investment funds.  Close Brother have ranked generally lower than the pack over this period, reflecting the extent of their problems.

Founded in the late 19th century, Close Brothers became listed in 1984 after a management buyout saw Chairman Rod Kent come to the fore.  Were its acquisition to proceed it would be the second buyout in almost 25 years, changing the private ownership of the bank.