UBS abandons $1.4 billion acquisition of robot advisor Wealthfront
The two companies said Friday that Swiss bank UBS and US automated advisor Wealthfront have terminated their $1.4 billion takeover agreement just over eight months after the partnership was announced.
It cancels what would have been the largest acquisition by UBS since the 2008 financial crisis. The purchase was also seen as a statement of intent by CEO Ralph Hammers for his plans to expand the bank’s presence in the US wealth management market.
“UBS remains committed to its US growth plans and will continue to build its digital wealth management offering,” UBS said in a statement.
The companies did not give a reason for the termination, but the news follows a sharp drop in valuations for fintech companies since the all-cash deal was announced in January.
Wealthfront CEO David Fortunato said the two companies are still exploring ways to work together and that UBS has awarded his company $70 million in $1.4 billion in funding.
“I am very excited about Wealthfront’s path forward as an independent company, and I am proud to share that with the hard work of our team and the trust you have placed in us, we will be cash flow positive” and profitable on an earnings basis by EBITDA “in the next few months,” Fortunato said.
The acquisition of Wealthfront, which uses automation to provide banking and financial advisory services, was expected to close in the second half of this year.
Popular with millennials and Generation Z customers, Wealthfront was founded in 2008 under the name kaChing. It was launched by former partner at Benchmark Capital, Andy Rashlev, targeting individual investors who wanted to track and replicate successful investment portfolios.
Since approving the acquisition of Wealthfront in January, UBS appointed Iqbal Khan as the sole head of its core wealth management unit in a management reshuffle that included division co-chair Tom Naratel announcing his departure from the bank.
Reporting by Owen Walker in London