Rea confirms Finsbury acquisition

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Rea Brothers, the small London merchant bank, confirmed its £4m paper- based acquisition of Finsbury Asset Management while revealing a near- halving of profits due to falling bond values in 1994.

Roger Parsons, Rea's chief executive, said the deal would be a "quantum leap" for the bank. Both companies are part of the Salomon family business group, but together will have funds under management of over £500m.

Rea's profits fell from £2m in 1993 to £1.2m last year because of a £940,000 fall in the bond portfolio that was unlikely to recur, Mr Parsons said. The Finsbury deal follows the £2.2m acquisition of Bolton-based actuaries DJT Group last October, and Rea would now have to "digest" the new businesses, he said.

Finsbury's owners will receive £3.94m-worth of new Rea shares. Rea is sponsoring a new investment trust, Finsbury Worldwide Pharmaceuticals Trust, which if it meets its £25m target will trigger another £0.5m in shares to Finsbury's former owners.

Rea raised its 1994 dividend by 33 per cent to 1p.