Swiss private-banking group Julius Baer Group Ltd. (JBAXY, JBARF) said Monday it will limit its proposed rights offering to 500 million Swiss francs as part of its capital raise to fund its acquisition of Bank of America Corp.'s (BAC) non-US wealth management unit.
The Julius Baer board has approved the invitation and the agenda, which includes the reduction in rights offering, to be published for the Extraordinary General Meeting of its shareholders scheduled for September 19, 2012 after receiving feedback from shareholders.
While agreeing to buy the non-US wealth management unit for about 1.47 billion Swiss francs last week, Julius Baer said it expects to fund the deal with existing excess capital, the issuance of new hybrid instruments, and new share capital.
The company had earlier planned to raise 750 million Swiss francs in total in the proposed rights offering, including 250 million Swiss francs in new share capital for future strategic flexibility.
However, Julius Baer has now decided to create only the authorized share capital partially required to fund the acquisition of Merrill Lynch's International Wealth Management business.
As part of the funding, Bank of America will also issue 240 million Swiss francs in new equity.
Bank of America acquired Merrill Lynch's international wealth management business outside the U.S. as part of its purchase of Merrill Lynch & Co. in 2009. Bank of America has been selling non-core business units and cutting thousands of jobs as part of its efforts to reduce costs and bolster capital.
For Julius Baer, the acquisition from Bank of America will strengthen its private banking position in growth markets of Asia, Latin America and the Middle East as well as in Europe. It expects the acquisition to add to its earnings from the third full-year following completion of the deal, which is expected towards the end of 2012 or early 2013.
BAC closed Monday's trading at $8.15, up $0.15 or 1.87% on a volume of 100.72 million shares, while JBAXY closed at $6.40, down $0.02 or 0.37% on a volume of 13,288 shares.
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