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(August 2, 2005) The little Canadian money manager, CI Investments, could be preparing to launch a hostile takeover bid for U.K. behemoth, Amvescap.
In a statement released on Monday to European media outlets, CI said it is considering a number of available options, including the possibility it will make a bid for the company, without the recommendation of Amvescap’s board members, adding that “there is no certainty that any offer will be made.”
CI has retained the services of British-based Fenchurch Advisor Partners, to advise the company about its options for a new attempt.
CI says it has already made a number of attempts to enter into discussions with Amvescap and its advisors. However, in a conference call this morning, Amvescap spokesman Doug Kidd told reporters the company had already fully responded to “expressions of interest” from CI. In early July, when CI first approached the company, the Amvescap board said it considered the approach and unanimously concluded that it was not in the best interests of shareholders. Kidd said there has been no contact with CI since then.
The takeover bid is part of CI’s effort to acquire AIM Trimark, the Toronto-based subsidiary, and some say the crown jewel of Amvescap’s holdings. Acquiring AIM Trimark’s mutual fund operations would nearly double CI’s mutual fund assets.
Traders will be watching Amvescap’s stock closely, and the reaction of the company’s new chief executive officer, Martin Flanagan, as analysts review the company’s second quarter earnings report. Flanagan, who joined Amvescap from Franklin Resources, took over control from chairman Charles Brady yesterday. The company postponed its earnings release until today, to give the new president a chance to participate in the announcement.
Second quarter earnings came in lower than many analyst’s expectations. Second quarter company profits reached $107.9 million US, down more than 7% from the same period last year. Amvescap said its funds under management were $373.2 billion at the end of June, down from $382.1 billion at the end of December last year. Amvescap shares closed nearly 2% lower in London.
As clients continue to pull cash out of AIM mutual fund in the U.S., and Canadian operations apparently prop up profits, industry watchers say it is unlikely the company will want to part with AIM Trimark. To get those assets, CI would likely need to purchase all of Amvescap, then sell off its foreign assets.
Although other companies like IGM Financial, UBS and U.S. based Franklin Templeton Investments are also rumoured to be interested in the deal, no others have officially come forward with offers.
Filed by Kate McCaffery Advisor.ca, kate.mccaffery@advisor.rogers.com
(08/02/05)