News and Press

Date:	22nd July 2008
Title:	Proposed combination of F&C Asset Management’s property business and REIT
Author:	F&C Asset Management plc
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22 July 2008

F&C ASSET MANAGEMENT PLC

Proposed combination of F&C Asset Management’s property business and REIT to create a leading UK-owned property asset manager with £8.5 billion assets under management

F&C Asset Management plc (“F&C”) announces that it has entered into agreement with the owners of REIT to combine F&C’s property asset management operations in the UK and Ireland (“F&C Property”) and REIT under a new brand, F&C REIT. REIT is a property asset manager which manages an international property portfolio with a value in excess of £3.5 billion, focused on commercial property investments in the UK and Europe. REIT comprises REIT Asset Management, which is owned by Leo Noé and Ivor Smith, and REIT Worldwide, which is owned by discretionary trusts established for the benefit in part of the families of Leo Noé and Ivor Smith (the “Trusts”). Details of the Transaction are as follows:

 

	F&C’s current property asset management operations will be combined with REIT to form F&C REIT Asset Management LLP (“F&C REIT”);
	F&C will be the majority owners of F&C REIT with a 70 per cent. interest;
	REIT owners will hold a 30 per cent. ownership interest in the combined business;
	In addition, F&C will pay to the owners of REIT consideration of £25 million cash and £35 million loan notes;
	Subject to F&C REIT meeting certain EBITDA performance targets for the combined business, the ownership interest of the REIT owners may increase up to 40 per cent. over the period to 31 December 2014; and
	Leo Noé will be Executive Chairman of F&C REIT, Nick Criticos of F&C will be Chief Executive and Ivor Smith will be Executive Member.

The key benefits of the Transaction for F&C are:

 

	Majority ownership of a leading UK-owned property asset manager with assets under management of £8.5 billion;
	Combination of REIT’s strong investment track record, entrepreneurial approach and geographic diversity with F&C’s strong investment track record, fund management skills and distribution network;
	Significant opportunities to launch new products and synergies from increased scale;
	Clients will benefit from the enhanced product offering of the combined operation, while experiencing continuity of investment process and client servicing from their existing teams and fund managers; and
	Advancing F&C’s plan to grow its business through development of a multi-specialist model.

The Board of F&C expects the Transaction to be earnings enhancing for the first full year post completion[1].

Commenting on the Transaction, Alain Grisay, Chief Executive of F&C, said:
‘This transaction is consistent with the development of our multi-specialist business model and the strategic direction of our three year plan. 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.’

Leo Noé, Chairman of REIT and proposed Executive Chairman of F&C REIT, said:
‘This combination will be transformational for both businesses. 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.’

The Transaction is conditional on, inter alia, the approval of F&C’s shareholders. Friends Provident and Eureko have irrevocably agreed to vote in favour of the Transaction.

Fenchurch Advisory Partners is acting as exclusive financial adviser to F&C in relation to the proposed Transaction.

Enquiries:
F&C Asset Management plc
Jason Hollands 020 7011 4168

John Sunnucks (Tulchan Communications) 020 7353 4200

Fenchurch Advisory Partners 020 7382 2222
Richard Locke
Graham Marchant

REIT Asset Management
Kevin McGrath 020 7499 2244

Howard de Souza (The PR Office) 077 3495 6132

[1] On an underlying earnings basis (i.e. before amortisation of intangibles and exceptional items). This statement should not be interpreted to mean that the earnings per share of F&C will necessarily be greater than those for the preceding period.

This summary should be read in conjunction with the full text of the Announcement.

 

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