Bank of Nova Scotia is purchasing MD Financial Management, a Canadian asset manager that focuses on physicians and their families, for C$2.59 billion in cash.
Scotiabank plans to fund a part of the deal via a C$1.50 billion common equity offering, selling 19.7 million common shares at C$76.15 per share on a bought-deal basis.
MD Financial, which has C$49 billion in assets under management and administration, would operate as a stand-alone brand within Scotiabank Wealth Management at the closing of the deal. At that time, Scotiabank and the Canadian Medical Association would begin a 10-year agreement in which the CMA would exclusively promote Scotiabank as its preferred provider and the bank would invest C$115 million to support the advancement of the medical profession and healthcare in Canada.
Scotiabank expects the deal to affect its common equity Tier 1 capital ratio by 30 basis points.
In the acquisition, Scotiabank's global banking and markets division and J.P. Morgan were financial advisers to Scotiabank. Torys LLP was its legal adviser. The deal is expected to be completed in the fourth quarter.
In the common equity offering, Scotiabank has agreed to sell the shares to underwriters led by Scotia Capital Inc. The underwriters have an overallotment option to buy 3.0 million additional shares. If this option is fully exercised it would result in gross proceeds of C$1.73 billion.
The offering is expected to close on or after June 8.
