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RBC to Acquire BlueBay Asset Management

RBC Wealth Management continues to expand asset management capabilities

TORONTO and LONDON, October 18, 2010 —  Royal Bank of Canada (RY on TSX and NYSE) and BlueBay Asset Management plc (BBAY on LSE) today announced that their respective boards have reached an agreement on terms for a recommended acquisition of BlueBay by RBC.

Under the terms of the acquisition, BlueBay shareholders will be entitled to receive 485 pence in cash for each BlueBay share. This represents a premium of 29 per cent to the last closing price of BlueBay shares, as at Friday, October 15, 2010. The acquisition values the issued share capital of BlueBay at approximately £963 million (C$1.56 billion). It is expected that the acquisition will be implemented by way of a court-approved arrangement and that formal documentation will be sent to BlueBay shareholders in November 2010.

The Board of BlueBay has unanimously recommended that its shareholders vote in favour of the acquisition. It is anticipated that, subject to the satisfaction of all regulatory and other conditions, the acquisition will close by the end of December 2010. The transaction will be funded using RBC's existing cash resources, and is not expected to have a material impact on RBC's earnings per share in the near term.

BlueBay is one of Europe's largest independent managers of fixed income debt funds and products, with US$40 billion in assets under management (as at September 30, 2010) on behalf of institutional and high net worth investors in the UK, Europe, the U.S., the Middle East, Asia and Australasia. Based in London, BlueBay manages a combination of long-only and alternative investment strategies across the sub-asset classes of fixed income credit - primarily focused on European and emerging markets strategies - including: investment grade corporate debt, high yield corporate debt, emerging market debt, convertible bonds, distressed debt, and multi-strategy debt capabilities. In order to best serve its clients, BlueBay will retain its investment autonomy and related operational independence following the acquisition. The 220 employees of BlueBay will become valued members of RBC's Global Asset Management business and collaborate with their new partners in RBC Wealth Management, RBC's global segment for wealth and asset management solutions.

"This acquisition will further RBC's strategy to leverage our position as a top 10 global wealth manager, and continue to expand our asset management solutions for the benefit of our clients around the world," said George Lewis, group head, RBC Wealth Management. "BlueBay is an ideal fit with RBC's growing asset management business and we are confident that this transaction will benefit clients, employees and shareholders of both firms."

"Both management teams are excited by a shared vision of investment performance excellence and the exceptional growth opportunities which a combination of our two firms offers," said John Montalbano, CEO of RBC Global Asset Management. "We believe this to be a uniquely positive transaction for the clients and employees of both our organizations."

"Our board is unanimously recommending this combination with RBC because of the clear benefits it affords the firm's shareholders, clients and employees," said Hans-Jörg Rudloff, chairman of BlueBay.

"RBC's strength and stability make it an ideal partner for BlueBay," said Hugh Willis, CEO of BlueBay. "Its commitment to its clients and its high standards of business practices mirror our own and lie at the heart of the excellent cultural fit between our firms. We greatly look forward to working together in providing our clients with world class investment solutions."

Today's announcement follows RBC Wealth Management's announcement in September that it will be moving from three geographic wealth management businesses to four (Canada, United States, UK and Emerging Markets), that it aims to replicate the success achieved in the Ultra High Net Worth segment in Canada across international markets, and, establish a Global Trust business - highlighting its world-class trust capabilities. RBC Wealth Management's continued focus on leveraging the capabilities and expertise of its most profitable business, RBC Global Asset Management, to drive further growth, is reinforced through today's announcement.

A conference call is scheduled to take place on October 18, from 8:30 a.m. to 9:00 a.m. (ET) / 1:30 p.m. to 2:00 p.m. (BST) and will feature a presentation followed by a brief question and answer period with analysts. Interested parties can access this call live on a listen-only basis via telephone at: +1-416 695-7806 or 1-888-789-9572, passcode 3843540#. Please call between 8:20 a.m. and 8:25 a.m. (ET).

A recording of the conference call will be available after 9:00 a.m. (ET) / 2:00 p.m. (BST) on October 18 until Jan 18 via telephone at:
+1-416-695-5800 or 1-800-408-3053, passcode 3081068#.

Information related to this announcement will be available at: www.rbc.com/investorrelations.

About RBC Global Asset Management and RBC Wealth Management
RBC Global Asset Management (RBC GAM) comprises RBC Asset Management Inc. (RBC AM), Phillips, Hager & North Investment Management Ltd. (PH&N) and RBC Global Asset Management (U.S.) Inc. The group of companies forms the asset management division of Royal Bank of Canada (RBC), a global institution with the reputation of stability and strength. RBC GAM group of companies manage approximately C$200 billion in assets, including over C$100 billion in IFIC-reported mutual fund assets in Canada. PH&N won the Lipper Awards for "Best Overall Fund Group" in 2010 and "Best Bond Fund Family" in 2007, 2008 and 2010; RBC AM won the Lipper Awards for "Best Bond Fund Family" in 2009 and "Best Overall Fund Group" in 2007 and 2008. Website: www.rbcgam.com.

RBC Global Asset Management is part of RBC Wealth Management which directly serves affluent and high net worth clients in Canada, the United States, Latin America, Europe and Asia. RBC Wealth Management provides integrated and diversified international wealth management expertise and solutions, asset management and trust services to high net worth individuals and to corporate and institutional clients. Services provided by RBC Wealth Management consultants, advisors, private bankers and trust officers include trust and estate planning, tax advice, discretionary investment management and investment advisory services, structured solutions, banking, lending and global custody. RBC Wealth Management has more than C$500 billion of assets under administration, over C$250 billion of assets under management and more than 4,300 financial consultants, advisors, private bankers and trust officers.

About BlueBay Asset Management
Founded in 2001, BlueBay Asset Management plc provides investment management services primarily to institutional investors and manages a combination of long-only and alternative products across the sub-asset classes of investment grade corporate debt, high yield corporate debt, emerging market debt, convertible bonds, distressed debt and multi-strategy debt strategies.

Based in London with satellite offices in Stamford and Tokyo, BlueBay Asset Management plc is one of the largest independent managers of fixed income debt funds and investment solutions in Europe, with approximately US$40.0 billion of assets under management (as at September 30, 2010).

Listed on the London Stock Exchange since November 2006, BlueBay is a constituent of the FTSE 250. Website: www.bluebayinvest.com.

Important notice
This announcement is not intended to and does not constitute an offer to sell, or form part of, or constitute the solicitation of an offer to purchase or subscribe for or an invitation to purchase, any securities. The acquisition of BlueBay will be made solely by means of a court-approved arrangement which will contain the full terms and conditions of the acquisition. BlueBay shareholders are advised to read the formal documentation in relation to the acquisition carefully, once it has been dispatched.

Perella Weinberg Partners UK LLP and RBC Capital Markets, which are authorized and regulated in the United Kingdom by the Financial Services Authority, are acting as joint financial advisers to RBC in connection with the acquisition and are not advising any other person or treating any other person as their client in relation thereto and will not be responsible to anyone other than RBC for providing the protections afforded to their clients, or for giving advice to any other person in relation to the acquisition, the contents of this announcement or any other matter referred to herein.

Forward looking statements
Certain statements contained in this announcement may be deemed to be "forward-looking statements" under certain securities laws, including the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. These forward-looking statements include, but are not limited to, statements about the expected effects of the acquisition of BlueBay, the expected timing and scope of the acquisition and other statements other than in relation to historical facts. Forward-looking statements are typically identified by words such as "believe", "expect", "foresee", "forecast", "anticipate", "intend", "estimate", "goal", "plan", and "project" and similar expressions of future or conditional verbs such as "will", "may", "should", "could", or "would".

By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations or conclusions will not be achieved. BlueBay and RBC caution readers not to place undue reliance on these statements as a number of important factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements. These factors include, but are not limited to, the satisfaction of the conditions to the Acquisition and additional factors, such as: local and global political and economic conditions; foreign exchange rate fluctuations and interest rate fluctuations (including those from any potential credit rating decline) and legal or regulatory developments and changes. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. We caution that the foregoing list of important factors is not exhaustive. Neither BlueBay nor RBC undertake any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

Media Enquiries:

RBC
Europe & Asia:

Dafina Grapci-Penney, +44 (0) 207 680 5052,
dafina.grapci-penney@greentarget.net
Phillippa Cantrill, +44 (0)20 7680 5063, phillippa.cantrill@greentarget.net

U.S. & Canada:
Gillian McArdle, +1 416 974 5506, gillian.mcardle@rbc.com

Investor Relations:
Josie Merenda, RBC, 416 955 7803, josie.merenda@rbc.com
Karen McCarthy, RBC, 416 955 7809, karen.mccarthy@rbc.com

 

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