Old Mutual - M.Johnstone Sale
Old Mutual PLC
11 October 2000
OLD MUTUAL PLC
OLD MUTUAL AND ABERDEEN ANNOUNCE THE MERGER BETWEEN
ABERDEEN AND MURRAY JOHNSTONE TO FORM THE LARGEST
INDEPENDENTLY OWNED FUND MANAGER IN SCOTLAND
Introduction
The Boards of Old Mutual PLC ('Old Mutual') and Aberdeen
Asset Management PLC ('Aberdeen Asset Management' or
'Aberdeen') announce that they have signed a binding
agreement on the terms of the sale by Old Mutual of
Murray Johnstone Holdings Limited ('Murray Johnstone') to
Aberdeen to create Scotland's largest independent fund
management business with over £27 billion in funds under
management. The transaction involves a payment of total
consideration to Old Mutual of approximately £150
million, comprising £133.5 million for goodwill and net
assets of approximately £16.5 million.
Shareholder approval
Due to the relative sizes of Murray Johnstone and
Aberdeen the transaction will require the passing of an
ordinary resolution by Aberdeen shareholders. A circular
will be dispatched to Aberdeen's shareholders, as soon as
practicable, convening an Extraordinary General Meeting to
approve the merger. Shareholders representing
approximately 59.13 per cent. of Aberdeen's issued share
capital have confirmed that they will vote in favour of
the transaction.
Consideration
Consideration of approximately £150 million will be
payable to Old Mutual on completion of the transaction.
The total consideration payable will depend on the final
net asset position of Murray Johnstone at completion.
The consideration will be financed from Aberdeen's own
cash resources and bank borrowings which have been
arranged specifically for the purpose of the transaction.
Strategic rationale of the merger for Aberdeen
The merger of Aberdeen and Murray Johnstone represents an
excellent opportunity for Aberdeen to significantly
strengthen its presence in a number of core business
areas and to develop complementary new businesses.
The acquisition will increase Aberdeen's funds under
management by over 17 per cent. from around £23.3 billion
(including approximately £1.5 billion from the recently
announced acquisition of Barclays Property Investment
Limited) to approximately £27.3 billion (based on funds
under management as at 30 September 2000 for both Murray
Johnstone and Aberdeen).
The board of Aberdeen expects the transaction to be
earnings enhancing in the current year, before the
amortisation of goodwill and exceptional charges. Strategic
rationale for Old Mutual's sale of Murray Johnstone and
the merger with Aberdeen.
Prior to the announcement of its tender offer for United
Asset Management Corporation ('UAM') Old Mutual carried
out a strategic review of Murray Johnstone with UAM and
decided that the creation of a distinct asset management
capability in Glasgow did not add value to Old Mutual's
asset management business in the UK.
In addition the senior management of Murray Johnstone and
UAM had been reviewing the ownership structure of Murray
Johnstone for some time. During the course of the summer
Murray Johnstone entered into discussions with a number of
parties to identify a suitable partner to develop the
business to its full potential.
The merger with Aberdeen represents a significant
opportunity for Murray Johnstone to develop its areas of
strength, notably in the investment trust sector, private
equity and internationally, with a partner equally
committed to the development of these business areas.
Benefits of the merger.
The Boards of Aberdeen and Murray Johnstone firmly
believe that the merger represents a major commercial
opportunity to create a business which will allow the
enlarged group to become one of the largest independently
owned fund management businesses in the UK.
The enlarged group and its clients are expected to
benefit from:
' being ranked fourth in the UK investment trust
market;
' being a leading provider of open-ended
funds in the UK;
' the acceleration of the achievement of
Aberdeen's aspirations to develop its international
client base;
' access to a leading regionally focussed private
equity business;
' significant potential for revenue growth through
access to Aberdeen's IFA distribution
network and the existing customer bases of
both businesses;
' a combination of the complementary
expertise of both organisations which will create a greater
pool of skills in the enlarged company; and
' the benefits of scale available from a combination
of both businesses and the cost savings from
combining certain of the enlarged group's
operations.
Management, infrastructure and locations
Senior management of Murray Johnstone will be
offered continuing roles within the enlarged
group. Giles Weaver, Chairman of Murray
Johnstone, will be invited to
join the board of Aberdeen as a non-
executive director. David MacLellan,
Managing Director of Murray Johnstone, will
also be invited to join the board of
Aberdeen. Aberdeen intends to build a
substantial business in Glasgow of which
Murray Johnstone's business will form the
core. Murray Johnstone's private equity
business will continue to operate its
regional network of offices in the UK.
The name Murray Johnstone will be retained
for Murray Johnstone's existing investment
trusts and other business areas as
appropriate.
Conditions
The merger is subject to, inter alia,
the following conditions:
' Aberdeen shareholders approving
the necessary resolutions for the approval of the
transaction at the Extraordinary General
Meeting; and
' approval from the relevant regulatory
authorities in the countries in which Murray Johnstone operates.
Financial information relating to Murray Johnstone
Murray Johnstone reported profit before taxation of £5.3
million for the year ended 31 December 1999
(1998: £6.5 million) and net assets of
£16.8 million as at 31 December 1999.
Commenting on the transaction, Eric
Anstee, Chief Executive Financial Services,
Old Mutual, said: 'Following the completion
of the UAM transaction, we are all pleased
to have swiftly concluded this deal at a good
price which will be accretive for our
shareholders.'
Martin Gilbert, Chief Executive of Aberdeen,
said:
'This merger with Murray Johnstone, whose
business is so complementary to our own, is
another major step forward in the
development of Aberdeen. We anticipate
significant potential for revenue growth
from a merger which gives us the unique
opportunity in a single step to elevate us
to fourth position in investment trusts and
the top tier in open ended funds. It gives
an excellent platform to develop an
international private equity business,
enhances our distribution in North America
and gives an entree into the growing
market for Socially Responsible Investment.
Furthermore, Aberdeen has a track record
of making mergers and acquisitions work
and this is particularly highlighted by
the merger with Prolific in September
1997.'
David MacLellan, Managing Director of
Murray Johnstone said:
'Aberdeen has developed a substantial
business over the last few years and the
commercial logic for a combination of our
businesses is very strong.
All areas of Murray Johnstone's business
will, I believe, benefit from this merger
and we look forward to working with our new
colleagues for the benefit of our clients.'
11 October 2000
ENQUIRIES
Old Mutual
020 7569 0100
Eric Anstee
Murray Johnstone
0141 226 3131
David MacLellan
UAM
001 617 330 8900
Franklin Kettle
Donaldson, Lufkin & Jenrette
020 7655 7000
Malik Karim
College Hill (for Old Mutual)
0207 457 2020
Nicholas Williams
Lansons (for Murray Johnstone)
020 7490 8828
Henrietta Guthrie
Aberdeen Asset Management
01224 631 999
Martin Gilbert
Intelli Corporate Finance
020 7653 6300
Gordon Neilly
Penrose Financial
020 7776 7605
Louise Hatch
Donaldson, Lufkin & Jenrette
International, which is
regulated in the United Kingdom by the
Securities and Futures Authority Limited, is
acting exclusively for Old Mutual and for
no one else in connection to this
transaction and will not be responsible to
anyone other than Old Mutual for providing
the protections afforded to customers of
Donaldson, Lufkin & Jenrette International.
Intelli Corporate Finance Limited, which is
regulated in the United Kingdom by the
Securities and Futures Authority Limited,
is acting exclusively for Aberdeen and for
no one else in connection to this
transaction and will not be responsible to
anyone other than Aberdeen for providing the
protections afforded to customers of
Intelli Corporate Finance Limited.
INFORMATION FOR EDITORS
Aberdeen Asset Management
Aberdeen Asset Management is a leading
independently owned UK based investment
management business based in London and
Aberdeen. Aberdeen manages funds for a number
of large institutions together with a wide
range of unit trusts, investment trusts,
ISAs, pension funds and
offshore funds for institutions and private
investors. Aberdeen manages investments in
excess of £23 billion and is quoted on
both the London and Singapore stock
exchanges with a market capitalisation of
approximately £890 million.
Murray Johnstone
Murray Johnstone is a leading UK-based investment
management business based in Glasgow,
Scotland with five other offices in the UK
as well as international offices in Chicago,
Bahrain and Singapore. As at 30 June 2000,
Murray Johnstone had funds under
management of approximately £4.2 billion and 241 full-time
employees, including 40 investment
professionals.
Old Mutual
Old Mutual is a leading financial
services group in southern Africa. In the
UK, Old Mutual owns the merged group of
Gerrard and Capel Cure Sharp and Old
Mutual Securities, the recently merged
institutional broking and corporate finance
businesses of Albert E Sharp Securities and
Grieg Middleton. It has also recently
completed the acquisition of Murray
Johnstone's parent company, United Asset
Management Corporation in the USA. Old
Mutual is listed on the London Stock
Exchange and has a market capitalisation
of approximately £5.9 billion.
United Asset Management Corporation
UAM is one of the largest investment
management organisations in the world, providing a range of
investment management services to
institutions, mutual funds and high net
worth investors. These services are offered
through a diverse group of operating firms
that managed over $195 billion for clients
throughout North America and the rest of the
world as at 30 June 2000.
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