Schroders spent months earlier this year actively planning a potential buyout of M&G in a deal that would have created a £ 1 trillion wealth management business.
The plan was eventually abandoned on valuation grounds, discussion sources told Bloomberg after M & G’s share price slipped from a low of 209p to 217p.
A proposal drawn up in collaboration with an unnamed partner would have resulted in Schroders – already the UK’s largest specialist manager with funds totaling 672 billion. However, the discussion never materialized.
M&G, which at the time of its most recent update had assets of $ 367.2 billion.
The company reported a $ 12.1 billion outflow in 2019.
The outflows contributed to a 30% decrease in profit from £ 1.14 billion a year ago to £ 788 million. Fee-based revenue fell 4% to £ 988m after retail margins came under pressure.
While the commercial pressures facing the retail business are very immediate, the attempt to build a vertically integrated distribution business through the purchase of RLAM’s Ascentric platform last year remains an uncertain prospect.
While a 2.6% increase in the dividend for the full year helped boost stocks that previously traded at 9% yield, they are still trading for below the 220 pence they were in circulation at.
The merger would have created a global top 20 asset manager and the largest fund house in Great Britain, which Legal & General would have narrowly ousted.
Any deal would also be a sharp break with Schroders’ recent acquisition strategy under CEO Peter Harrison (pictured), which for the past few years has focused on small bolt-on deals for specialized companies that can afford a premium fee.
The source said Bloomberg that the Schroders executives were particularly interested in M & G’s Asian sales network, which would have given them crucial access to the region.