River and Mercantile has revealed it rebuffed an offer for its solutions business shortly after agreeing to offload it to Schroders.
In a stock market announcement on Wednesday, the asset manager confirmed it had received an informal approach for its £42bn solutions business from special purpose acquisition company (Spac) Disruptive Capital Acquisition Company (DCAC), which it chose not to engage further.
River and Mercantile agreed in October to sell the business, which looks after pension funds’ investment strategies, to Schroders in the first quarter of 2022. It said the initial offer from DCAC came shortly after it announced the deal.
DCAC then expressed a further indication of interest after River and Mercantile sent out a circular to shareholders on 23 November related to the sale.
On Wednesday morning DCAC made an announcement outlining its rationale for acquiring the business, saying its offer had been higher than that of Schroders.
It said: “The DCAC directors believe the SD [solutions division] offer will benefit River and Mercantile’s shareholders in the near term and longer term.
“The DCAC directors believe that a combination of DCAC and SD would create significant value for the combined group’s clients, portfolio managers, employees and shareholders. The DCAC directors also believe that there is material value in leveraging other aspects of the DCAC board, business network and strategy to increase the assets under management, to enhance the liability solutions on offer to pension fund clients, to improve access to alternative assets and so widen client appeal.”
But River and Mercantile’s board concluded there was material uncertainty as to the value and form of the consideration proposed, availability and sources of financing, conditionality and other deal terms.
It said DCAC’s latest announcement “provides no additional information and addresses none of these fundamental concerns”.
“The board continues to believe that Schroders’ all cash offer, its greater execution certainty and Schroders’ clear plans for the business, its employees and clients, is in the best interests of all stakeholders. As a result, the board concluded that it should not engage further with DCAC regarding its indicative proposal.”
River and Mercantile finds itself in the middle of a bidding war between Premier Miton and Assetco after both asset groups confirmed in stock exchange announcements late last month they had approached the firm regarding an acquisition. Both groups have said any offer is conditional on River and Mercantile completing the sale of its solutions business.
