UBS and Wealthfront call off $1.4 billion merger
- Dan Primack, author of Axios Pro Rata
Illustration: Annelise Capossela/Axios
UBS no longer will pay $1.4 billion in cash to buy Palo Alto, Calif.-based robo-adviser Wealthfront. The mutual termination comes eight months after the merger was announced, with UBS now to invest $69.7 million via a convertible note deal at around the same valuation.
Why it matters: This is a big setback for the Swiss lender's efforts to broaden its client base, particularly in the U.S.
Cap table: Prior to the new investment from UBS, Wealthfront had raised around $200 million from Index Ventures, Ribbit Capital, Launch Fund, Social Capital, Tiger Global, Spark Capital, Dragoneer, DAG Ventures and Greylock.
Backstory: A source familiar with the situation says the deal collapse came suddenly, as reflected by Friday night's terse announcement, with unspecified regulatory concerns being raised in just the past several weeks.
The bottom line: A merger collapse is hardly novel in 2022, but this one is a bit surprising in that Wealthfront is the rare tech company whose business benefits from rising interest rates. A unicorn, if you will....