UBS and automated wealth management provider Wealthfront have mutually agreed to scrap their previously announced $1.4bn merger deal under which the latter was to be acquired by the Swiss investment bank’s subsidiary UBS Americas.
The all-cash deal was announced in January 2022. If closed as planned, the deal would have seen Wealthfront become a wholly owned subsidiary of UBS and function as a business under UBS Global Wealth Management Americas.
As part of the termination announcement, UBS said that it will buy a $69.7m note convertible into the shares of Wealthfront. The financing has been offered by the Swiss bank at a valuation of $1.4bn, said Wealthfront, which will continue to operate as an independent company.
Wealthfront CEO David Fortunato, in a company blog, wrote: “With this fresh round of funding under our belt along with the ability to begin self-funding the business, we are committed to building a lasting company that positively impacts the lives of our clients for decades to come.”
Based in the US, Wealthfront had developed a platform to make it simple for clients to manage their wealth by giving them access to financial planning capabilities, investment management options, and banking services.
As of 26 January 2022, the robo-advisor managed more than $27bn in assets and had over 470,000 clients across the US.
At the time of announcing the deal, UBS said that it wanted to expedite its growth ambitions in the US apart from widening its reach among affluent investors and growing its distribution and capabilities.
In connection to the scrapping of the deal, the Swiss investment bank stated: “UBS remains committed to its growth plans in the US and will continue the build-out of its digital wealth management offering.”