EUROPE - F&C Asset Management has entered into due diligence for the potential takeover of UK-based Resolution Asset Management.
In a statement issued this morning, F&C's majority shareholder, Friends Provident Plc, said it has agreed an £8.6bn (€12.8bn) deal to merge with UK life insurer Resolution plc and create Friends Financial plc - having only announced on Monday the two firms were in merger talks and placing F&C Asset Management in an effective takeover of Resolution Asset Management (RAM).
The deal is also somewhat complicated because while F&C is the asset management arm of the UK-based life insurer Friends Provident, F&C is technically a separately-listed entity on the London Stock Exchange and Friends Provident owns 52% of the asset manager's shares.
Any proposal by Friends Provident to merge with another life insurance company therefore requires F&C's independent board of directors to review the financial status of Resolution's asset management firm before deciding whether to approve the takeover.
Should F&C's board and shareholders approve the deal, it will give the F&C-branded company assets under management of £165bn, according to a statement from F&C, along with annualised cost savings of £26m before tax.
RAM is largely known for its retail business in the UK and has built over £60bn in assets since the company was created in 2005. F&C, by contrast, has £100bn in assets through strong retail and institutional businesses in the Netherlands as well as being the largest asset manager in Portugal, and with offices in Dublin, Paris, Frankfurt and Geneva.
Jason Hollands, head of group communications at F&C, said if the deal is approved, F&C will acquire RAM and the combined company will be maintained as a separately-listed company on the LSE and continue to develop the pan-European business through a "multi-boutique" strategy.
"RAM is not a listed business, it is embedded within Resolution so we will report to the market when we are in a position to do so. But [Friends Provident and Resolution] have made a clear commitment to asset management. Both firms have developed high margin, high alpha business, moving increasingly to a multi-boutique model and expanding our network of offices."
Should the deal go ahead, Alain Grisay would remain as chief executive of F&C Asset Management and F&C and RAM will then have to work closely with joint venture partners of both groups, such the limited liability partnership F&C Partners, a fund of hedge funds boutique owned by F&C and its two principles.