Exchange-traded fund (ETF) provider WisdomTree Investments has agreed to pay $611 million in cash and shares to acquire ETF Securities' $17.6 billion European commodity unit in a bid to continue diversifying its business.
With the deal, WisdomTree would reach $66 billion in global assets, securing its spot as the world's ninth largest exchange-traded product sponsor and becoming the largest global independent ETP provider, according a statement from the firm announcing the deal.
Wisdom Tree will pay ETF Securities $235 million in cash, of which $200 million will be funded by newly issued debt, and 30 million shares, which amount to an 18% stake in the US provider.
WisdomTree expects the transaction to close in the first quarter of 2018.
'The acquisition will immediately add scale, diversification and profitability to our business in Europe, the second largest ETF market in the world and a growing and strategically important region for us and the entire industry,' said Jonathan Steinberg, WisdomTree president and CEO, in the statement.
'The addition of this complementary and competitively positioned commodity business is an important development in WisdomTree's strategy to establish itself as a differentiated and diversified ETP provider that can thrive globally.'
Other firms are also growing in the ETF space. This year, Invesco announced it would acquire Guggenheim Partners’ ETF business for at least $1.1 billion in cash, as well as buy Source, a London-based firm.
Meanwhile, Nikko Asset Management said it would acquire a minority stake in New York-based ETF boutique ARK Investments, and JP Morgan Asset Management boosted its ETF business with the hire of the former Invesco PowerShares boss.
In Latin America, WisdomTree listed its first batch of Ucits ETFs in Mexico in May.
Latin American investors increased their ETF allocation by $2 billion in the year ending July 2017, according to research firm ETGFI. Investors around the world had pumped $391.26 billion into ETFs and ETPs as of August.