Bottom Line: Canadian deal is a good end to this era

 
Elizabeth Fournier
AS SOON as activist investor Edward Bramson took the helm of F&C in 2011, the future of the 145-year-old firm – founded in 1868 by solicitor Philip Rose and Lord Westbury – was up in the air.

Yesterday’s move by BMO Financial Group, part of Canada’s mammoth Bank of Montreal, makes sense for both parties.

BMO has been scouting around for a way to increase its foothold in London for a while. But instead of going the way of Canadian sibling RBC and focusing on lending and advisory work, it has chosen to go down the asset management route – doubling its assets under management and opening up opportunities to sell its products across the UK and Europe.

For F&C shareholders too, the deal is a good one. Though it looks cheap compared to some peers – at 13.5 times 2014’s full-year earning estimates – the sector is somewhat overvalued, and while a rival bid is still possible, shareholders intimated yesterday that suitors were unlikely to get a look-in unless they pitched significantly higher. This isn’t the first time F&C has courted foreign ownership – during the nineties a partnership with Germany’s HypoVereinsbank ended up as a 90 per cent stake before it was taken over by Eureko, and subsequently floated.

But though the historic F&C name is set to continue under the BMO umbrella, the deal marks the symbolic end of one of the City’s oldest firms. Bramson may not have stuck around to see it, but investors should be pleased that it went out in style.

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