F&C investor says £700m Canadian bid may be too low
Wednesday 29 January 2014
One of the largest investors in F&C Asset Management has warned its Canadian suitor, BMO Financial, that a £708m bid for the company could be too low.
Standard Life Investments, which owns 10 per cent of F&C, said it would wait to see whether rival bidders emerge for the 146-year-old fund manager before giving its approval.
“We note that F&C have recommended a cash offer from the BMO,” David Cumming, head of equities said in a statement.
“The price agreed represents an attractive valuation from the standpoint of the Canadian bank. Consequently we intend to keep our options open should another suitor for F&C emerge.”
The 120p-a-share deal has already been backed by F&C's board and comes at a 28 per cent premium to F&C's closing share price at the end of last week.
BMO, which includes the Bank of Montreal, said it had already received irrevocable undertakings from directors at F&C as well as Aviva, which owns more than 12 per cent of its shares.
Analysts believe rival bids could now come from overseas. Even Aviva seemed lukewarm on the deal and could renege on its agreement if a higher bid is tabled, which BMO does not match.
David Lis, head of equities at Aviva, said: “Given board and management backing for the BMO offer and a valuation within our range of possibilities, (albeit at the bottom end), we are comfortable providing our support to the transaction.”
If no rivals emerge, the takeover will double the assets at BMO's fund management arm to £162bn and round off an eventful few years for F&C, overhauled by corporate raider Ed Bramson in 2011.
The US-based investor stood down as the group's chairman in August having stripped out costs, replaced its management team and altered its strategy.
F&C shares closed up 6.1 per cent to 123.5p on hopes of a bidding war for the FTSE 250 group.
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