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WisdomTree (WETF) Divests Canadian Subsidiary to CI Financial
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WisdomTree Investments, Inc. recently announced an agreement to sell its Canadian subsidiary — WisdomTree Asset Management Canada, Inc. — to CI Financial Corp. for a deal value ranging CDN $7-$13 million ($5.3-$9.9 million). However, the deal amount will depend upon the accomplishment of certain assets under management (AUM) growth targets for the next three years.
CI Financial will pay an upfront price of CDN $5 million ($3.8 million), contingent to purchase price adjustments at closing.
Deal Details
Per the terms of the deal, CI Financial will take over all the outstanding shares of WisdomTree Canada. This will help CI Financial operate its business, which will mainly include managing and advertising WisdomTree Canada funds. The transaction is likely to close in the first quarter of 2020, subject to WisdomTree Canada funds’ unitholders’ approval and other customary closing conditions (including regulatory approval).
Moreover, the Canadian arm announced that its U.S. High Dividend Index ETF will be terminated on or around Jan 31, 2020, per the terms of the declaration of trust. The unitholders of this ETF will be entitled to receive an amount equivalent to the net asset value of Non-Hedged Unit or Hedged Unit, as of its closure date. Further, at the closure of trading on or about Jan 24, 2020, the Units of the Fund will likely be delisted voluntarily from the Toronto Stock Exchange.
Benefits of the Deal
The transaction will help WisdomTree’s Canadian subsidiary to be more cost effective in the thriving Canadian ETF market, as it will pass on its index licenses to CI Financial, which are currently under WisdomTree’s proprietary indexes. Further, WisdomTree has strategically banked on opportunities in the Canadian market over the past three years. Also, its Canada funds will benefited from CI Financial’s resources and scale.
Conclusion
WisdomTree continues to focus on growth by boosting distribution capabilities, investing in technology, launching innovative products, and streamlining actions to curb costs.
WisdomTree recently released third-quarter results, which reflected rise in AUM balance on a year-over-year basis, mainly aided by market appreciation and net inflows.
However, shares of WisdomTree have lost 19.9%, so far this year, against the industry’s rise of 11.9%.
Currently, WisdomTree carries a Zacks Rank #3 (Hold).
Key Picks
Navient Corporation (NAVI - Free Report) has witnessed 2.9% upward earnings estimate revision for 2019 over the past 30 days. Moreover, this Zacks #1(Strong Buy) Ranked stock has surged 62.9%, in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank stocks here.
FS Investment Corporation’s (FSK - Free Report) current-year earnings estimate has remained unrevised over the past 30 days. Further, the company’s shares have gained 11% in the year-to-date period. At present, it flaunts a Zacks Rank of 1.
Enova International, Inc.’s (ENVA - Free Report) ongoing-year earnings estimate has moved 2.8% north in 30 days’ time. Additionally, the stock has appreciated 22.8%, so far this year. It currently sports a Zacks Rank #1.
Note- 1 CDN = $0.75905
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WisdomTree (WETF) Divests Canadian Subsidiary to CI Financial
WisdomTree Investments, Inc. recently announced an agreement to sell its Canadian subsidiary — WisdomTree Asset Management Canada, Inc. — to CI Financial Corp. for a deal value ranging CDN $7-$13 million ($5.3-$9.9 million). However, the deal amount will depend upon the accomplishment of certain assets under management (AUM) growth targets for the next three years.
CI Financial will pay an upfront price of CDN $5 million ($3.8 million), contingent to purchase price adjustments at closing.
Deal Details
Per the terms of the deal, CI Financial will take over all the outstanding shares of WisdomTree Canada. This will help CI Financial operate its business, which will mainly include managing and advertising WisdomTree Canada funds. The transaction is likely to close in the first quarter of 2020, subject to WisdomTree Canada funds’ unitholders’ approval and other customary closing conditions (including regulatory approval).
Moreover, the Canadian arm announced that its U.S. High Dividend Index ETF will be terminated on or around Jan 31, 2020, per the terms of the declaration of trust. The unitholders of this ETF will be entitled to receive an amount equivalent to the net asset value of Non-Hedged Unit or Hedged Unit, as of its closure date. Further, at the closure of trading on or about Jan 24, 2020, the Units of the Fund will likely be delisted voluntarily from the Toronto Stock Exchange.
Benefits of the Deal
The transaction will help WisdomTree’s Canadian subsidiary to be more cost effective in the thriving Canadian ETF market, as it will pass on its index licenses to CI Financial, which are currently under WisdomTree’s proprietary indexes. Further, WisdomTree has strategically banked on opportunities in the Canadian market over the past three years. Also, its Canada funds will benefited from CI Financial’s resources and scale.
Conclusion
WisdomTree continues to focus on growth by boosting distribution capabilities, investing in technology, launching innovative products, and streamlining actions to curb costs.
WisdomTree recently released third-quarter results, which reflected rise in AUM balance on a year-over-year basis, mainly aided by market appreciation and net inflows.
However, shares of WisdomTree have lost 19.9%, so far this year, against the industry’s rise of 11.9%.
Currently, WisdomTree carries a Zacks Rank #3 (Hold).
Key Picks
Navient Corporation (NAVI - Free Report) has witnessed 2.9% upward earnings estimate revision for 2019 over the past 30 days. Moreover, this Zacks #1(Strong Buy) Ranked stock has surged 62.9%, in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank stocks here.
FS Investment Corporation’s (FSK - Free Report) current-year earnings estimate has remained unrevised over the past 30 days. Further, the company’s shares have gained 11% in the year-to-date period. At present, it flaunts a Zacks Rank of 1.
Enova International, Inc.’s (ENVA - Free Report) ongoing-year earnings estimate has moved 2.8% north in 30 days’ time. Additionally, the stock has appreciated 22.8%, so far this year. It currently sports a Zacks Rank #1.
Note- 1 CDN = $0.75905
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>