2nd UPDATE: F&C Opposes Commercial Property Trust Merger

9th Jun 2010 14:46

(Adds F&C Commercial Property Trust comment.) By Jason Douglas Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Fund manager F&C Asset Management PLC (FCAM.LN) said Wednesday it is seeking to stop a commercial property trust it manages from merging with another, in a deal that would create a U.K. real estate company with a portfolio of shops and offices worth GBP1.6 billion. The fund manager said it is working on its own proposals to put to the board of F&C Commercial Property Trust Ltd. (FCPT.LN) as an alternative to a merger with peer UK Commercial Property Trust Ltd. (UKCM.LN) that the two trusts agreed Wednesday. The enlarged trust would become the U.K.'s sixth-largest listed property company, with a combined property portfolio worth GBP1.6 billion and a market value of about GBP1.6 billion, the trusts said. The proposed merger has been agreed by the trusts' boards and has the backing of insurers Phoenix Group Holdings (PGH.AE) and Friends Provident, a unit of Resolution Ltd. (RSL.LN). Together, they own just over 50% of the F&C trust's shares. The deal still requires the approval of minority shareholders in both vehicles under stock exchange rules because Ignis Asset Management, manager and shareholder of UK Commercial Property Trust, is owned by Phoenix. F&C said it is trying to hammer out an alternative plan that would "benefit all shareholders." It didn't provide specific details, but said it is seeking to put proposals to the F&C Commercial Property Trust board that would include reducing fees and keeping the services of Richard Kirby, manager of the trust's portfolio. An alternative to the merger would also mean F&C would keep earning fees for managing the F&C trust, as Ignis is slated to run the portfolio of the merged company. F&C said Wednesday it has already received notice of the termination of its contract, which brought in roughly GBP3.7 million in management and performance fees to the fund manager in 2009. A spokesman for F&C Commercial Property Trust told Dow Jones Newswires minority shareholders of both trusts, many of whom are private investors and their brokers, are supportive of the merger plan and the trusts are confident the deal will be approved at shareholder meetings scheduled for August. He added the board of F&C Commercial Property Trust received proposals from F&C but they were deemed less attractive than the merger. The enlarged company will be able to save on fees, attract more investors and get involved in much bigger property deals, the spokesman said. Under the terms of the merger deal, shareholders in the F&C trust can choose to receive shares in UK Commercial Property Trust or 91 pence in cash for each share held. F&C Commercial Property Trust shareholders choosing the share option will receive UK Commercial Property Trust shares with a net asset value equivalent to the net asset value of their F&C shares. At 1341 GMT, shares in F&C Asset Management were up 0.1 pence, or 0.2% at 52.4 pence. Shares in F&C Commercial Property Trust were 1.3% higher at 92.7 pence, while shares in UK Commercial Property Trust were 1.6% higher at 78.1 pence. The trusts' advisers on the merger were Winterflood Investment Trusts, Dickson Minto and Execution Noble. -By Jason Douglas, Dow Jones Newswires; 44-20-7842-9272; [email protected] (END) Dow Jones Newswires June 09, 2010 09:46 ET (13:46 GMT)