Tilney looks to derail Rathbones' Smith & Williamson merger talks - report

Rathbone Brothers' planned merger with financial services provider and corporate adviser Smith & Williamson could be derailed by an aggressive offer from private equity-backed rival Tilney.

Tilney has made an all-cash offer for Smith & Williamson, Sky News reported on Tuesday, a week after FTSE 250-listed investment manager Rathbones announced it had been in "exclusive" talks about a merger amid a wave of consolidation in the wealth management sector.

Sources close to Smith & Williamson told Sky that the company's management favoured a potential deal with Rathbones rather the cash offer from Permira-owned Tilney.

Rathbones is thought to be looking at all equity deal that would see S&W shareholders owning around 30% of the enlarged entity.

The London and Liverpool investment group is expected to make a formal announcement about the terms of a deal next week and if directors agree a deal it will be subject to the approval of shareholders, with Smith & Williamson mostly owned by its current and former staff, with a 29% stake owned by Canada's AGF.