F&C Agrees to £708m Bid from Canadian Asset Manager

UPDATE: F&C has agreed its sale to BMO Global Asset Management for 120p per share--a premium of 30%

Holly Cook 28 January, 2014 | 2:10PM
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Having announced on Monday that it had received an offer from Canada's BMO Financial Group, F&C Asset Management (FCAM) has on Tuesday confirmed that it has agreed to the bid that values the UK fund house at £708 million.

Shares in F&C topped the FTSE 350 on Monday, rising 25% to close at 116.4p and signalling that the market expected the deal to go through. The 120p-per-share price tag is more than 30% above F&C's Friday closing price. F&C shareholders will also receive the 2p annual dividend announced for 2013. 

F&C is a business that has undergone considerable change over recent years following a series of acquisitions and mergers. Activist investor Edward Bramson built a significant stake in the business in 2011 and embarked on a strategic review that resulted in the ousting of F&C chairman Nick MacAndrew and significant cost-cutting measures that impacted back-office operations. 

The firm sufferend significant outflows last year, shedding £126 million in the final quarter of 2013 according to Morningstar Direct data and ending the year £820 million poorer than where it started.

With a history that dates back to the Foreign & Colonial of the late 1900s, F&C is known for its investment trusts as well as its open-ended funds. For investment trust holders, Morningstar's Jackie Beard points out that the structure of investment trusts means the independent boards of F&C trusts are free to decide on future management. "They aren't beholden to staying with F&C so potentially we could see mandates up for tender as the boards look for security/certainty from their manager," Beard said. 

F&C offers a total of 42 funds and in 2013 held 0.99% of the open-ended fund market in the UK, according to Morningstar data.

Bank of Montreal's BMO Global Asset Management manages assets in excess of $132 billion versus F&C’s £90 billion of assets under management.

A version of this article was initially published on January 27, 2014.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
F&C Investment Trust Ord1,060.00 GBX0.95Rating

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Holly Cook

Holly Cook  is Manager, Morningstar EMEA Websites

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