Sat. Nov 27th, 2021

Martin Gilbert struggles with a competitive suitor for London-listed asset manager River and Mercantile as he tries to create a new competitor in the UK’s investment industry.

The veteran dealmaker has submitted a bid for River and Mercantile, which has also received an offer from Premier Miton, a rival fund house led by CEO Mike O’Shea.

A bidding war is now likely with River and Mercantile’s shares rising 12 percent on Tuesday morning trading in London.

The competing bidders have until December 21 to confirm their takeover bids. None of them disclosed any price details of the bid they had already made.

AssetCo, the Aim-listed acquisition vehicle chaired by Gilbert, currently owns 5.85 percent of River and Mercantile, while Premier Miton holds a 5 percent stake.

Gilbert is one of the UK’s most productive investment makers. He founded Aberdeen Asset Management in 1983 and after several acquisitions helped design his merger with Standard Life in 2017 to create the company now known as Abrdn.

Gilbert is vice chairman of River and Mercantile, but withdrew from the company’s board while talks about a deal take place.

Earlier this year, AssetCo Saracen Fund Managers acquired, the Scottish asset management boutique, and it also holds interests in Rize ETF and Parmenion, a consulting firm previously owned by Abrdn.

Broker Peel Hunt said Premier Miton needs to scale up to reach its financial potential and is likely to extract greater cost synergies from any deal with River and Mercantile.

Peel Hunt added: “AssetCo is keen to scale up, has an existing platform (through its Saracen business) and will likely be able to fund any transaction in cash.”

An analyst who declined to be named said the board of directors of River and Mercantile faced a “real dilemma” in evaluating the takeover bids, which would likely both be a mix of cash and shares.

“There is considerable uncertainty associated with the valuation of AssetCo’s shares, which are trading at a very large discount. . . This could affect the structure and value of the AssetCo offering. ”

Both approaches are subject to the completion of the sale of River and Mercantile’s solution business to Schroders for £ 230 million in a deal agreed last month. The completion of this transaction will leave R&M with assets of around £ 5.6 billion.

Mike O’Shea has been the CEO of Premier Miton since November 2019 following the merger of Premier Asset Management and Miton. O’Shea joined Premier in 1986 and rose to become head in 2005.

Premier Miton’s share price fell 0.9 per cent during morning trading in London while shares in AssetCo remained unchanged.

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