Scotiabank and the Canadian Medical Association (CMA) announced May 31 that Scotiabank will acquire MD Financial Management (MD) for $2.585 billion. MD is a provider of financial services to physicians and their families, with more than $49 billion in assets under management and administration.
The acquisition is expected to close in fiscal Q4 2018, subject to regulatory approvals and closing conditions.
10-year affinity deal
At the closing of the acquisition, Scotiabank and CMA will enter into a 10-year affinity deal through which CMA will exclusively promote Scotiabank as the preferred provider of financial products and services to physicians and their families. Both Scotiabank and the CMA will jointly support philanthropic initiatives and other programs for physicians and their communities.
"MD has served the distinct financial needs of Canada's physician community for decades and has delivered strong results," said Brian Porter, President and CEO at Scotiabank. "Through this transaction, MD clients will benefit from a greatly expanded range of financial solutions, including access to expertise across our wealth and asset management businesses. We look forward to providing customized banking services to a wider segment of the physician community in support of their unique needs."
"In tandem with this acquisition, we are also pleased to enter into an affinity agreement with the CMA," added James O'Sullivan, Group Head, Canadian Banking. "Under the terms of this agreement, Scotiabank will invest $115 million over the next ten years to support the advancement of the medical profession and health care in Canada. Scotiabank has a strong tradition of supporting the medical community and is proud to substantially enhance that commitment to help underscore CMA's strategic vision of a vibrant profession and a healthy population."
MD Financial Management will operate as a distinct, stand-alone brand within Scotia Wealth Management, with its existing people and management team in place.
A public offering of 19.7 million common shares at $76.15 per share on a bought deal basis for gross proceeds of $1.50 billion will fund a portion of the purchase price for the acquisition, says Scotiabank.