WisdomTree has taken on a more aggressive stance in the Europe ETF industry, acquiring the European side of ETF Securities, a London-based ETF issuer.
ETF Securities has agreed to sell its European business to WisdomTree for $611 million in cash and shares, which represents a multiple of 15.7x earnings before interest, taxes, depreciation and amortization, reflecting the high valuation and scarcity of potential takeover targets in the industry, reports Chris Flood for the Financial Times.
“WisdomTree has entered into an agreement to acquire the European exchange-traded commodity, currency and short-and-leveraged business of ETF Securities,” according to an email note.
The deal is expected to go through by end of March 2018 whereupon WisdomTree will manage about $66 billion in ETF assets and rank as the ninth-largest ETF provider in the world.
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ETF Securities, which is best known for its precious metals-backed ETF options, has been rumored to be a potential takeover target in the industry, but would-be buyers were loath to pay the rumored price of $1 billion.
“The acquisition will immediately add scale, profitability and diversification to our business in Europe,” Jonathan Steinberg, chief executive of WisdomTree, told Financial Times.
Steinberg said WisdomTree saw that the ETF market in Europe was “poised for an acceleration to growth,” which made this “an ideal time” to a go through with the deal between two complementary businesses. WisdomTree’s ETF line is more focused on global equities and does not include a dedicated group of physical commodities-backed ETFs.
“You need the global footprint to talk to the global investor,” Steinberg told Bloomberg. “This just allows us to be a much more competitive and forceful organization.”
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