2019

2019 Open
2019 Open

Recommended All-Share Merger of Premier Asset Management Group PLC and Miton Group plc

4 September 2019

Summary

The Boards of Premier Asset Management Group PLC ("Premier") and Miton Group plc ("Miton") are pleased to announce that they have reached agreement on the terms of a recommended all-share merger of Premier and Miton, to be effected by means of a court-sanctioned scheme of arrangement between Miton and the Miton Shareholders under Part 26 of the Companies Act 2006 (the "Merger").

Under the terms of the Merger, holders of Miton Shares will be entitled to receive:

0.30186 Premier Shares in exchange for each Miton Share

Based on this exchange ratio (the "Exchange Ratio") and the Closing Price of 171.75 pence per Premier Share on 3 September 2019 (being the Latest Practicable Date), the Merger values each Miton Share at 56.74 pence, comprising an equity value of 51.84 pence and a special dividend of 4.9 pence per Miton Share.

Following completion of the Merger, Miton Shareholders will own approximately 33 per cent. of the Combined Group (on a fully diluted basis), which will continue to be traded on AIM.

Reasons for the Merger

The Boards of Premier and Miton believe that there is a compelling strategic and financial rationale for the Merger which creates a diversified active UK asset manager with a strong investment capability that leverages an efficient platform, as described below:

Strategic rationale

  • A combined business with a wider product range and greater scale, with reported pro-forma combined AUM of £11.5 billion (as at 30 June 2019), that is well positioned for future growth.
  • Complementary investment capabilities with limited overlap, evenly balanced between outcome-based multi-asset strategies and genuinely active single strategies.
  • Enhanced distribution relationships with UK financial advisers, wealth managers and platforms. Based upon the data in the Pridham Report published in February 2019, the combined business would have been the 5th largest contributor to UK net retail sales for the calendar year ended December 2018.
  • Shared client-centred culture with a focus on products that meet core market needs and the pursuit of strong investment performance.

 Financial benefits

  • Greater financial strength with a more diversified revenue mix, access to economies of scale and a robust balance sheet.
  • Compelling value creation and earnings accretion for both sets of shareholders, underpinned by expected recurring run-rate pre-tax cost synergies of approximately £7 million per annum from alignment of operating platforms. Annualised synergies will be achieved three years after completion of the Merger.

The Combined Group

The Board of the Combined Group will be drawn from both organisations to ensure a unified approach to the future. Following completion of the Merger:

  • Mike Vogel, Chairman of Premier, will be Chairman of the Board of the Combined Group.
  • Mike O'Shea, CEO of Premier, will be CEO of the Combined Group.
  • Piers Harrison, COO of Miton, will be CFO of the Combined Group.
  • Two Miton Directors, David Barron and Katrina Hart, will become non-executive directors of Premier.
  • Robert Colthorpe and William Smith will remain as non-executive directors of Premier.
  • The Combined Group will be rebranded Premier Miton Group plc.

Under the terms of the Merger, Miton has declared a special dividend of 4.9 pence per Miton Share which is conditional upon and only payable if, the Scheme becomes Effective.

Further details of the arrangements in respect of dividends are set out in paragraph 5 below.

Recommendations

The Miton Directors, who have been so advised by Spencer House as to the financial terms of the Merger, consider the terms of the Merger to be fair and reasonable. Spencer House is providing independent financial advice to the Miton Directors for the purposes of Rule 3 of the Code. In providing its financial advice to the Miton Directors, Spencer House has taken into account the commercial assessments of the Miton Directors. 

Accordingly, the Miton Directors intend unanimously to recommend that Miton Shareholders vote in favour of the Scheme at the Miton Court Meeting and the resolutions relating to the Merger at the Miton General Meeting (or in the event that the Merger is implemented by way of an Offer, to accept or procure acceptance of such Offer) as the Miton Directors who hold Miton Shares have irrevocably undertaken to do or, as they have otherwise irrevocably undertaken to direct (and use all reasonable endeavours to procure that) their nominees do, in respect of their own beneficial holdings of 16,384,128 Miton Shares in aggregate and representing approximately 9.49 per cent. of Miton's issued share capital as at the Latest Practicable Date.

Further details of these irrevocable undertakings are set out at paragraph 14 Appendix 3 to this Announcement.

In order to allot and issue the New Shares, Premier will be required to seek the approval of the Premier Shareholders at the Premier General Meeting. The Merger is accordingly conditional on the approval of the Premier Shareholders of the issuance of the New Shares at the Premier General Meeting. The Premier Directors consider the Merger to be in the best interests of Premier and the Premier Shareholders as a whole and intend unanimously to recommend that Premier Shareholders vote in favour of the Premier Resolution to be proposed at the Premier General Meeting which will be convened in connection with the Merger, as they have irrevocably undertaken to direct (and use all reasonable endeavours to procure that) their nominees do, in respect of their own beneficial holdings of 7,230,265 Premier Shares representing, in aggregate, approximately 6.83 per cent. of Premier's ordinary share capital in issue as at the Latest Practicable Date.

The Premier Directors have received financial advice from Fenchurch in relation to the Merger. In providing their advice to the Premier Directors, Fenchurch has relied upon the Premier Directors' commercial assessment of the Merger.

Letters of Intent

Premier has received non-binding letters of intent to vote in favour of the Scheme (or in the event that the Merger is implemented by way of an Offer, to accept or procure acceptance of the Offer) in respect of Miton Shares representing, in aggregate, approximately 17.43 per cent. of Miton's existing issued ordinary share capital as at the Latest Practicable Date.

Further details of these letters of intent are set out at paragraph 14 and Appendix 3 to this Announcement.

General

It is intended that the Merger will be implemented by way of a court-sanctioned scheme of arrangement between Miton and the Miton Shareholders under Part 26 of the Companies Act 2006, further details of which are contained in the full text of this Announcement and which will be set out in the Scheme Document. However, Premier reserves the right, with the consent of the Panel and Miton or, in certain circumstances, without the consent of Miton, to implement the Merger by way of a takeover offer (as defined in Part 28 of the Companies Act 2006).

The Merger will be subject to the Conditions and certain further terms set out in Appendix 1 to this Announcement and to the full terms and conditions which will be set out in the Scheme Document, including the approval of the Scheme by the Scheme Shareholders, the sanction of the Scheme by the Court and the approval of Premier Shareholders.

The Scheme Document will include full details of the Scheme, together with notices of the Miton Court Meeting and the Miton General Meeting and the expected timetable, and will specify the action to be taken by Scheme Shareholders. It is expected that the Scheme Document will be despatched to Miton Shareholders on or about 17 September 2019.

It is expected that the Premier Circular will be posted to Premier Shareholders at or about the same time as the Scheme Document is posted to Miton Shareholders, with the Premier General Meeting being held before the Miton Meetings.

The Scheme is expected to become effective in the fourth quarter of 2019, subject to the satisfaction or waiver of the Conditions and certain further terms set out in Appendix 1 to this Announcement.

Commenting on the Merger, Mike O'Shea, CEO of Premier said:

"This merger will bring together two complementary and culturally-aligned businesses. Both are focused on delivering added value for clients through actively-managed, strongly-performing and relevant investment products. The combined group will create a company with greater scale and financial strength to invest for future growth, with broader and deeper investment capabilities, enhanced distribution and a more efficient operating platform. Ultimately, this should position us well for continued growth and deliver value for clients, shareholders and employees."

Commenting on the Merger, David Barron, CEO of Miton said:

"Miton's expertise in actively managed, differentiated high conviction funds is a very strong complement to Premier's leading position in multi-asset strategies. With limited overlap between the two businesses, this merger will result in the ability to offer our clients a broader and more compelling range of investment solutions."

Commenting on the Merger, Mike Vogel, Chairman of Premier said:

"I'm delighted to be asked to chair the combined group of two successful and proven active management investment businesses. There is an exceptional strategic and commercial fit between these two companies, which strengthens front office capability and our broader operating platform. As well as a more diverse investment offering, the merger will establish a genuinely exciting team of talented investment professionals and a great platform for future growth."

Commenting on the Merger, Jim Pettigrew, Chairman of Miton said:

"There is a very compelling strategic rationale for a merger of Premier and Miton, based on the creation of a combined business with greater scale, client relevance, distribution coverage and financial strength, but still focused on our shared core values of delivering good investment results and service for our clients. We believe this merger should create real momentum, superior positioning and confidence in the enlarged group to capture the potential market opportunities more quickly than either firm could do independently, but without compromising the key features to which our clients and shareholders are attracted."

Commenting on the Merger, Gervais Williams, Senior Executive Director of Miton said:

"I am excited at the prospect of combining the talent of our two highly client-focused, active managed investment companies and leading the equity teams going forward. We will offer a combination of high conviction, actively-managed equity and fixed income funds and a market-leading range of outcome-focused multi-asset funds for our clients. Our unified investment capabilities mean we will be well positioned to help our clients as they navigate an uncertain political and economic environment."

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

The Merger will be subject to the Conditions and further terms set out in Appendix 1 to this Announcement and to the full terms and conditions which will be set out in the Scheme Document. Appendix 2 contains the sources and bases of certain information used in this summary and this Announcement. Appendix 3 contains details of the irrevocable undertakings and letters of intent received in relation to the Merger that are referred to in this Announcement. Appendix 4 contains details of and bases of calculation of the anticipated quantified financial benefits of the Merger. Appendix 5 contains definitions of certain terms used in this summary and this Announcement.

For the purposes of Rule 28 of the City Code, the quantified financial benefits statement contained in this Announcement is the responsibility of Premier and the Premier Directors. Appendix 4 sets out the anticipated quantified financial benefits statement relating to cost savings and synergies arising out of the Merger and provides underlying information and bases of belief. Appendix 4 also includes reports from Premier's reporting accountant, KPMG LLP, and its financial adviser, Fenchurch, in connection with the anticipated quantified financial benefits statement, as required pursuant to Rule 28.1(a) of the City Code, and provides underlying information and bases for the accountant's and adviser's respective reports. Each of KPMG LLP and Fenchurch has given and not withdrawn its consent to the publication of its report in this Announcement in the form and context in which it is included.

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