LONDON ( The Deal) -- Proving once again that love and marriage are not just for the young, Canada's oldest bank, Bank of Montreal ( BMO), announced an agreement Tuesday, Jan. 28, to buy F&C Asset Management, manager of the City of London's oldest investment fund.
BMO Global Asset Management (Europe) Ltd., the bank's U.K. subsidiary, will offer 120 pence a share for the British target, valuing its share capital at £708 million ($1.17 billion), a premium of 28.3% to F&C's closing valuation on Jan. 24.
The buyer said the acquisition would almost exactly double BMO's assets under management to $269 million.
"With an established pedigree in fixed income investment and broad equity and property capabilities across its European platform, F&C advances BMO's capabilities by adding scope and scale to our well-established portfolio of wealth management businesses," said BMO Financial Group CEO William Downe in a statement.
However, the offer received a cool reception from one of F&C's largest institutional shareholders, Standard Life Investments Ltd., which has a 10.2% stake in the company, and hinted it believed a higher price could be forthcoming.
"The price agreed represents an attractive valuation from the standpoint of the Canadian Bank," said Standard Life global head of equities David Cumming in a statement. "Consequently we intend to keep our options open should another suitor for F&C emerge."
However, the share price did not immediately appear to reflect Standard Life's concerns. By lunchtime Tuesday, F&C was trading at 122.5 pence, up 5.2% from Monday's close, but only slightly more thanthe 122 pence a share investors will receive once F&C's 2 pence-per-share final 2013 dividend is taken into account. The companies disclosed advanced talks about an offer for F&C only on Monday.