UBS scraps $1.4bn deal for robo-adviser Wealthfront

By Amelia Isaacs on Tuesday 6 September 2022

Savings and Investment

The investment bank has made a u-turn on the merger agreement announced in January.

UBS scraps $1.4bn deal for robo-adviser Wealthfront
Image source: UBS.

Swiss investment banking giant UBS has ditched plans to acquire US robo-adviser Wealthfront.

The u-turn on the deal means a delay in the bank’s first big acquisition under CEO Ralph Hamers.

Originally announced in January, the acquisition seemed a large part of plans to grow UBS’s operations, bringing in more than 470,000 new clients in the US and more than $27bn in assets under management.

It was also set to help UBS target millennial and gen Z investors, a primary focus for Wealthfront.

According to a statement made by both companies on Friday, UBS and Wealthfront “mutually agreed” to terminate the merger agreement, valued at $1.4bn.

UBS will instead purchase a $69.7m note convertible into Wealthfront shares, still at a $1.4bn valuation.

“UBS remains committed to its growth plans in the US and will continue the build-out of its digital wealth management offering,” it said in the statement. 

The original deal marked a re-entry into the digital wealth sector for UBS, four years after it exited the space when it sold off its Smart Wealth platform.

With the shift from acquisition to a convertible note, Wealthfront will remain its own company, and UBS will have to wait a while longer before its first big acquisition under Hamers.

“I am incredibly excited about Wealthfront’s path forward as an independent company and am proud to share that thanks to the hard work of our team and the trust you put in us, we will be cash flow positive and EBITDA profitable in the next few months,” Wealthfront CEO David Fortunato wrote in a statement.

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