Merrill Lynch & Co. today offered to buy Mercury Asset Management, the U.K.'s largest pension fund manager, for £3.1 billion ($5.25 billion) in cash. Boards of both firms have blessed the acquisition.
The deal would make the combined entity, Merrill Lynch Mercury Asset Management, one of the world's largest money managers, with $450 billion under management.
Merrill is offering £17 per share, a 31.7% premium over Mercury's £12.91 closing price yesterday. With £104.4 billion in assets under management as of Sept. 30, the deal values Mercury's issued shares around 3% of assets under management. Investment Counseling advised Mercury in the transaction.
Merrill Lynch Mercury will be based in London. Mercury Chairman Hugh Stevenson will serve as non-executive chairman for a year. Stephen Zimmerman, MAM's deputy chairman, and Carole Galley, vice chairman, will serve as co-heads of the combined unit and will join parent Merrill Lynch's executive management committee.
The investment approaches of Merrill Lynch Capital, a unit of Merrill Lynch Asset Management that also includes Hotchkis and Wiley, will not be affected, a spokesman said.
Deutsche Shell AG is creating a 2 billion deutsche mark ($1.16 billion) pension fund in a move to generate higher returns from its assets, said Jens-Peter Stoehr, treasurer. Four managers will be hired as will a global custodian.
The Hamburg-based fund will be split into two major components: 60% in European assets and 40% in non-European assets; two managers will be selected for each. Each of the four portfolios will be divided 50-50 between stocks and bonds. One of the portfolios is expected to be passively managed, but which one has not yet been decided.
Tentative selections of managers and a global custodian will be made Friday, and will be submitted to Deutsche Shell's board next week. The Netherlands' Shell Pensioenfonds Beheer is bidding for one of the European portfolios, its first effort to run assets for a sister company pension fund. Other contenders include Deutsche Bank and State Street Global. The assets now are invested in cash that backs a book-reserve pension fund.
El Paso County Pension System, Colorado Springs, Colo., is close to completing an asset-liability study. David Klemmer, plan administrator, said he expects some changes to take place in individual asset classes, such as U.S. equity where the fund now invests only in large-cap stocks. Results of the study are likely to be discussed at the $140 million fund's Dec. 17 board meeting.
The current mix is 21% U.S. bonds; 47% U.S. equity; 11% international equity; 7% real estate; 8% mortgages; and the rest in cash. Summit Strategy is assisting.
Alaska Permanent Fund staff will recommend the $19 billion Juneau-based fund hire AEW Capital Management, according to a report to the trustees. AEW could be assigned $300 million to run in a REIT. Trustees could vote on the recommendation this week.
The stock price for Affiliated Managers Group's IPO is expected to be set Thursday evening, according to Goldman Sachs, the lead underwriter. AMG plans to use the proceeds to invest in asset management firms. AMG's prospectus indicates the group would like to offer about 7 million shares between $20 and $23. If the price is set and the number of shares decided Thursday, trading could occur Friday.