April 28 (Reuters) - Deutsche Bank (DBKGn.DE) said on Friday it had agreed to buy Numis Corp (NUM.L), a London-based boutique investment bank, for about 410 million pounds ($511 million) as the German company deepens links with British corporate clients.
The deal is Deutsche's largest acquisition in more than a decade and marks a rare move for its global investment bank, which for years was in a period of retrenchment as Germany's top lender sought to recuperate from losses.
The announcement comes in the wake of Deutsche posting an 11th consecutive quarter of profit but also news of 800 back-office job cuts.
Fabrizio Campelli, who oversees Deutsche's investment bank, said it had been looking to grow its business in Britain. "Numis represents a compelling strategic fit," he said in a statement.
Analysts at JPMorgan criticised the move. "The deal is not aligned with what shareholders want to see more of - retail-type stable earnings, more cost focus...and capital return," they wrote in a note.
Deutsche Bank shares rose as much as 2.5% in early trade before erasing gains.
The transaction also brings Deutsche back into equities, an important business for Numis in Britain but one that the German bank exited globally.
In 2019, Deutsche Bank retreated from its global equities sales and trading business in a radical overhaul to shore up the bank, only keeping research and equities capital markets. With Numis, it's re-entering such business in the United Kingdom, albeit on a small scale.
"Strategically we are surprised" by the deal, said Anke Reingen, a London-based analyst at RBC.
Numis makes the bulk of its revenue in the United Kingdom and has a small presence in the United States. About 65% of its income in 2022 came from investment banking, and the rest from equities.
Numis's equities trading and sales operations in Britain will be left largely unchanged after the integration, a person with knowledge of the matter told Reuters.
MOVING IN
As part of the deal, 35 Deutsche Bank corporate finance employees will move in with more than 300 London-based Numis staff. The operation, which should close by the end of the year, will continue to be overseen by Numis' co-CEOs, and will operate under both names.
As part of its strategy, Deutsche Bank - a leading bank in Germany with strong European roots - said earlier this week that it aims to accelerate "growth initiatives" including potential acquisition of portfolios and assets.
The 350 pence-per-share, all-cash offer represents a premium of 72% to Numis stock's Thursday close.
Numis recommended the offer, which comprises 339 pence in cash, an interim dividend of 6 pence per Numis share for the six months ended March 2023 and an additional interim dividend of 5 pence per share.
Britain is the largest investment banking market in Europe and Numis is a diversified investment bank with a UK franchise.($1 = 0.8021 pounds)
