Wealth manager Tilney is struggling to complete its £625m takeover of rival firm Smith & Williamson as the UK watchdog refuses to sign off on it.
A stock exchange announcement this week from Canadian investment management company AGF Management, a listed shareholder in Smith & Williamson, revealed the deal has hit regulatory hurdles, with the Financial Conduct Authority not giving its approval to the deal.
In a joint statement, Tilney and Smith & Williamson said: "As part of the regulatory process to approve the transaction, the Financial Conduct Authority (FCA) has raised a number of issues with the proposed transaction as currently structured.
As part of the regulatory process to approve the transaction, the Financial Conduct Authority (FCA) has raised a number of issues with the proposed transaction as currently structured"
"As a result, Tilney is engaging with the FCA to seek to address its concerns and understand what requirements need to be met for a new application that are consistent with the strategic rationale and investment case.
"Both parties continue to believe that a merger of Tilney and Smith & Williamson represents a significant opportunity to create the UK's leading wealth management and professional services business and remain fully committed to the merger.
"Tilney and Smith & Williamson are already highly successful standalone groups, both of which are trading well and have excellent growth prospects."
The takeover was first announced in September 2019. Under the current terms of the deal, TS&W will have 80% of its £45bn AuM in discretionary mandates or funds, entrusted to approximately 280 investment managers, 260 financial planners and a professional services business with around 150 partners and directors.
It will have an enterprise value of approximately £1.8bn, with revenues of around £500m, and earnings before interest, tax, depreciation and amortisation of £150m.
According to the firms, the merger creates a "uniquely positioned" wealth management group with a wide geographic capability.
The deal had been expected to completed formally in early 2020 but this deadline is now in doubt.