Canada's BMO offers $1.2 billion for F&C Asset Management

Mon Jan 27, 2014 11:14am EST
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By Tommy Wilkes

LONDON (Reuters) - Canadian bank BMO Financial Group (BMO.TO: Quote) has offered to buy UK fund manager F&C Asset Management FCAM.L, operator of the world's oldest investment trust, for 697 million pounds ($1.2 billion) in cash in a move to beef up its wealth management arm.

F&C, which manages over $148 billion of assets, said in a statement on Monday that BMO had made an indicative offer of 120 pence per share, a 28 percent premium to its closing share price on Friday.

The fund manager, which can trace its roots back to the launch of the Foreign & Colonial Investment Trust (FRCL.L: Quote) in 1868, said it has indicated to BMO that it is likely to recommend the offer, and talks were at an advanced stage.

News of the approach sent shares in F&C soaring by as much as 27 percent to 119 pence, just below BMO's offer.

F&C shareholders would also be entitled to receive a 2 pence per share dividend for the 2013 financial year.

For BMO, formerly known as Bank of Montreal and one of Canada's five largest banks, any deal would more than double the size of its global fund management arm, which runs more than $132 billion in assets.

BMO is one of a handful of Canadian banks that have sought to expand their wealth management arms in the wake of the financial crisis, attracted by the industry's fee-based revenue and relatively low capital requirements. Canadian banks are also dealing with slowing growth in consumer lending at home, and see wealth management as a way to maintain profits.

The deal would not be the first by a Canadian bank for a British fund manager. Back in 2007 BMO bought London-based Pyrford International for an undisclosed sum, while Royal Bank of Canada (RY.TO: Quote) swooped on BlueBay Asset Management in 2010.   Continued...