Rothschild and Co Privatization : The owners of Paris-based investment bank Rothschild & Co. (ROTH.PA) are taking the company private. The banking titan started the year poorly. Dealmaking decreased its first-half sales by 10%. The business could have started better.
Rothschild’s first-half sales were 1.24 billion euros ($1.36 billion), down from 1.38 billion euros last year. The corporation, owned and controlled by the famous Rothschild financial dynasty, blamed this reduction on fewer activities in its main area, worldwide advising. M&A advisory fees declined 30% in the first half of the year. Due to this, the investment bank’s group share of net income for the first half of the year was 128 million euros, approximately half of the year before.
According to Dealogic, global mergers and acquisitions decreased by 40% from the previous six months. The bank’s problems worsened. Even though this is a terrible prediction, investment bankers and lawyers are confident that the sluggish stock market rebound will restore dealmaking trust.
Managing Partner Francois Perol agreed the situation was dire in a public teleconference with media. He claimed the investment bank anticipates its net income to plummet more than 50% this year. He attributed this to the steep decline in dealmaking operations. After the acquisition attempt was disclosed, the group selling Rothschild said it had bought almost 80% of the company’s shares, valuing the bank at 3.7 billion euros.
Concordia, a Rothschild holding company, initiated this risky bank privatization. The bank’s major shareholder is the Rothschilds. Three of France’s wealthiest families collaborated with Concordia. The coalition must reach 90% ownership by September 8. They can then squeeze out the minority stockholders.
Since sales and net profits have dropped, Rothschild & Co.’s privatization has been difficult. Industry workers remain optimistic. They believe the dealmaking landscape will return to its old glory when the stock market rebounds. The consortium’s efforts to make the company private demonstrate their long-term commitment to the well-known financial institution and their vision for the future.