F&C plans to merge its UK and Ireland property operations with asset manager REIT, under the new entity F&C REIT.
Under plans unveiled this morning, F&C will pay REIT owners £25m cash and £35m in loan notes for a 70% ownership of the new firm.
Specialist property boutique REIT Asset Management is wholly owned by founding partners Leo Noé (75%) and Ivor Smith (25%), while its discretionary trusts business REIT Worldwide is owned by the trusts for the benefit of the Noé and Smith families.
F&C UK retail chief Nick Criticos will be the new firm’s chief executive, with Noé appointed executive chairman and Smith named executive member.
The deal requires the approval of F&C's shareholders, with major owners Friends Provident and Eureko “irrevocably” behind the plan.
REIT owners may increase ownership up to 40% over the period to 31 December 2014, subject to F&C REIT meeting certain EBITDA performance targets.
F&C says the new entity will have £8.5bn in assets under management.
“This transaction is consistent with the development of our multi-specialist business model and the strategic direction of our three year plan,” F&C chief executive Alain Grisay says.
“It will increase our geographic scope, widen our product range and deepen our expertise in property asset management which is a core long term asset class for our clients.
“The combination should be significantly value enhancing for our shareholders.”
REIT chairman Noé adds: “Our skills, strengths and mind set complement each other superbly. We see great potential for value creation in the combined organisation from bringing together the two businesses.”IFAonline
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