RPT- UPDATE 1-Canada's BMO offers $1.2 bln for F&C Asset Management

Mon Jan 27, 2014 8:59am EST

Related Topics

* Deal values F&C at $1.15 bln plus dividend payment

* F&C likely to recommend offer

* F&C shares surge 26 percent

LONDON, Jan 27 (Reuters) - Canadian bank BMO Financial Group has made a preliminary offer to buy British fund manager F&C Asset Management for 697 million pounds ($1.2 billion) in cash.

F&C, which manages a little over $148 billion, said on Monday that the bank had make an indicative offer of 120 pence per share, a 28 percent premium its closing share price on Friday.

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

News of the approach sent shares in F&C soaring 27 percent to 118.8 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 asset management arm.

According to its website, BMO Global Asset Management runs more than $132 billion in assets.

Analysts at Numis said the price did not look like a "significant premium".

"We would therefore see 122p as very much a floor value (given the board's recommendation), with some upside potential if other interested parties were to emerge, given the price," they said in a note to clients.

BMO has until Feb. 24 to announce whether or not it intends to make a formal offer for F&C.

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