Rathbones is close to agreeing the formal terms of a £2bn deal, giving Smith & Williamson (S&W) nearly a £600m valuation, said the report.
In a statement today confirming the talks, S&W said, “Further to the recent announcement made by Rathbones, Smith & Williamson can confirm that it is in exclusive discussions with Rathbones regarding a possible merger of the two companies.
“While these discussions are ongoing, there can be no certainty these will lead to a transaction.
“If agreed, any such transaction will be subject to the approval of Smith & Williamson and Rathbones shareholders. A further announcement will be made as and when appropriate,” it added.
S&W, the UK’s eighth largest firm by fee income, reported double-digit rises in its operating income and adjusted operating profit thanks to significant growth in its tax, investment management, banking and business services divisions this year.
Its operating profit also rose 22% to £17.7m, with profits in investment management and banking rising 21% and its tax and business services more than doubling from £1m to £2.4m. S&W manages more than £19bn for clients.
Last month the firm promoted 13 new partners across several departments.
Rathbones provides investment and wealth management services for private clients, professional intermediaries and trustees, and manages around £32bn of clients' money through Rathbone Investment Management.