The purchase consideration of approximately $175 million (£112 million) is based on a price of $2.75 per share and represents a premium of $34 million (£22 million) over Artio's unaudited net asset value at 31 December 2012. Artio is debt-free and had net asset value of $141 million (£90 million) and cash and seed investments of $136 million (£87 million) on its balance sheet at 31 December 2012. The purchase price will be payable in cash, financed out of Aberdeen's existing cash resources, on completion of the Transaction.
This acquisition will expand Aberdeen's North American business, deepen its distribution network in the region and add to its existing fixed income capabilities. The transaction is consistent with Aberdeen's stated strategy to identify suitable, quality businesses to complement the Group's organic growth.
As at 31 December 2012, Artio managed assets of approximately $14.3 billion (£9.2 billion) on behalf of a diversified retail and institutional client base. Based on Artio's fourth quarter results annual run-rate revenues were approximately $71 million (£46 million). Artio's assets under management ("AuM") include mutual fund assets of $7.2 billion (£4.6 billion). Artio comprises a $9.8 billion (£6.3 billion) fixed income business which has delivered top quartile performance across its range of strategies including highly rated Total Return Bond and Global High Yield products and a $4.5 billion (£2.9 billion) international and global equities business which will be transitioned to Aberdeen's top performing global equity process post-completion. Artio's Global High Yield and High Grade teams are expected to join Aberdeen on completion of the Transaction.
The Transaction provides key benefits to Aberdeen:
• adds significant scale to Aberdeen's existing US fixed income business and complements organic efforts to expand distribution in the US, a priority growth market for Aberdeen;
• adds established global high yield and US total return offerings to Aberdeen which will complement Aberdeen's existing fixed income expertise;
• provides access to Artio's distribution channels with a deeper penetration of the US intermediary market, particularly the broker dealer and registered investment adviser ("RIA") segments which will also be of benefit to Aberdeen's existing product range; and
• the Transaction is expected to be earnings enhancing from the outset.
The Transaction, which is currently expected to close by the end of the second quarter or early in the third quarter of 2013, is subject to customary closing conditions, including U.S. antitrust approval, approval of a majority of Artio Global shareholders and approval of certain Artio Global mutual fund shareholders. As part of the Transaction, three of Artio's largest shareholders (representing approximately 45% of the total shareholding in aggregate) have entered into Voting Agreements providing that they will vote in favour of the Transaction.
Commenting on the Transaction, Martin Gilbert, Chief Executive of Aberdeen Asset Management, said: 'This transaction is in line with Aberdeen's strategy of undertaking infill acquisitions that will assist with growing our business organically. It will be of benefit to our North American business, a region we view as a key growth market for Aberdeen. The integration of Artio's operations will strengthen further our US fixed income expertise, in particular the addition of US total return and global high yield products, and will help to broaden and deepen our distribution network in the US'.
J.P. Morgan Limited (which conducts its UK Investment Banking activities as J.P. Morgan Cazenove) is acting as financial adviser and corporate broker to Aberdeen in connection with the Transaction, and Willkie Farr & Gallagher LLP is acting as Aberdeen's US legal advisor.