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. Last Updated: 07/27/2016

Invesco Announces Joint Fund Deal

LONDON -- British fund manager Invesco announced its widely anticipated merger with U.S. mutual fund company AIM Management Group on Monday, creating one of the world's largest investment management businesses.


The combined group will be called Amvesco plc and have about $150 billion under management. The merger values AIM at approximately $1.6 billion, Invesco said in a statement.


"We are creating a prototype company for the future," said Bob McCullough, Invesco's chief financial officer.


Invesco's chairman and chief executive Charles Brady, the man who will lead the new group, said it would have "the scale necessary for success as a financially strong and independent business operating in an increasingly concentrated industry."


McCullough stressed the deal was a merger of two companies rather than a takeover, as it had been described in some quarters. The two would combine to focus on revenue enhancement but would retain their individual identities, he added.


"Brand awareness will continue. Both will retain their names in the market place," he said.


Invesco said it would fund the merger with the issue of 290 million new shares to existing holders of AIM shares. These would be valued at approximately $1.1 billion. AIM shareholders will own around 45 percent of the enlarged group and be subject to restrictions on selling the shares.


McCullough said the merger, which is conditional on approval by both Invesco and AIM shareholders and other approvals, would be non-dilutive and would not have any cost savings built-in. However, there would be cost savings in the future, he said.


The merger is not expected to be completed before February.


McCullough also said the $500 million needed to fund the merger would come in the form of cash and debt, with a one-for-five rights offering on the cards. This would involve issuing roughly 50 million new shares, he said.








The merger presented an enormous number of synergies, with the two companies using different distribution channels and approaches. McCullough said he did not forsee any culture clash between the two.


There would be no change in their differing approaches, with Invesco continuing to be a "no-load" house, selling products directly to the customer, and AIM making its sales through intermediaries.