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WisdomTree buys ETF Securities’ European exchange-traded business

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ETF provider WisdomTree Investments has entered into a definitive agreement to acquire ETF Securities’ European exchange-traded commodity, currency and short-and-leveraged business, which includes USD17.6 billion of assets under management as of November 9, 2017.

The acquisition will provide WisdomTree with immediate scale in Europe, an industry leading position in European-listed gold and commodity products, greater AUM diversification globally, and profitability at WisdomTree Europe and in its International Operating segment.

With the addition of the Acquired Business, WisdomTree’s assets under management would total approximately USD66 billion globally on a pro-forma basis, as of November 9, 2017. The acquisition will secure WisdomTree’s spot as the ninthth largest ETP sponsor globally and elevate the company to the largest global independent ETP provider, with significant scale and presence in the two largest ETP markets: Europe and the US.

Under the terms of the agreement, WisdomTree will exchange USD253 million of cash and stock consideration of 30 million WisdomTree shares for the Acquired Business. Based on Friday’s market close price, the total consideration is valued at USD611 million. Excluding one-time transaction and integration costs, WisdomTree expects that the acquisition will be immediately accretive to its earnings per share.

“We are very excited to meaningfully expand and enhance our presence and capabilities in the European market by adding ETF Securities’ market-leading commodity platform to WisdomTree’s differentiated European product offering,” says Jonathan Steinberg, WisdomTree CEO and President. “The acquisition will immediately add scale, diversification and profitability to our business in Europe, the second largest ETF market in the world and a growing and strategically important region for us and the entire industry. The addition of this complementary and competitively positioned commodity business is an important development in WisdomTree’s strategy to establish itself as a differentiated and diversified ETP provider that can thrive globally and generate long-term shareholder value.”

“We have long held Graham Tuckwell and the business he and his team have built in extremely high regard,” says Steinberg. “Like WisdomTree, ETF Securities was started from scratch and has had to compete and win at the highest levels of asset management. Graham is one of the true pioneers of the ETF industry as the first to establish an exchange-traded gold exposure on a global basis as well as in Europe. Our shared entrepreneurial spirit should not be underrated in the development of this transaction or in the confidence we both have in our combined company moving forward.”

“Over the past 14 years, ETF Securities has built established market positions and a leading brand in the specialised ETP market,” says Graham Tuckwell, ETF Securities Chairman and Founder. “Our best in class commodity and currency ETP suite – including Europe’s first gold product – has a proven track record of innovation, and has allowed us to develop a highly attractive and diversified institutional, intermediary and retail client base. Our European ETP business and WisdomTree’s global business are enormously complementary and the combined business will undoubtedly be a well-diversified, highly innovative force in the industry and best positioned to serve investors’ evolving needs.”

Key terms of the transaction include a cash consideration of USD253 million, funded by USD200 million of newly issued debt plus USD53 million of cash on hand.    
Subject to regulatory approval and other customary closing conditions, the transaction is expected to close in late Q1 of 2018.
 

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