# Scotiabank to buy MD Financial Management for C$2.59 bln



## carson (Apr 28, 2011)

Today after the bell Scotiabank announced it was going to buy MD Financial Management for C$2.59 bln. To finance part of this they have announced a public offering of 19.7 million common shares at C$76.15 per share.

I just opened a position in BNS a few days ago at $77 / share. Anyone have any thoughts on how this might affect BNS growth prospects, stock price and dividends in the near term?

Cheers

https://www.theglobeandmail.com/bus...ank-strikes-26-billion-deal-for-md-financial/


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## heyjude (May 16, 2009)

That’s very interesting, thanks for sharing. I am a member of the CMA and formerly (1990s to early 2000s) had investments with MD Management, which later became MD Financial. They had a large market share among Canadian physicians and their families and touted their physician focus, bringing expertise on incorporation, practice management, etc. Their fees were also relatively low. At the time I was an MDM customer they had an alliance with National Bank. The did provide a very valuable service in educating and mentoring physicians, including residents, about the importance of caring for their finances. Over the years, as my portfolio grew, and as I became more knowledgeable, I outgrew their expertise and moved on. 

Selling MD Financial to Scotiabank is a good financial deal for the CMA, which will have a large injection of cash and can get back to focusing on its core competency. However, CMA members will no longer “own” their own financial services company. The depth and breadth of services will probably increase, but I wonder about the independence, and I expect the MD funds will probably end up as clones of Scotia funds, though with lower MERs. I see that the G&M states that the price is relatively high, presumably because many physicians have the potential to become high net worth clients. Only time will tell whether this was a good investment. The results will depend on how the change is managed and the culture of the organization under Scotiabank.


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