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Robert Fleming sold in #5bn deal

ROBERT Fleming, the privately-owned investment bank founded in Dundee in 1873 to pioneer the investment trust industry, is to be sold to Chase Manhattan at a 128% premium to the latest share price, writes Simon Bain.

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The #4.88bn deal to create Chase Fleming is highly unlikely to come unstuck like some other mega-mergers because it has the irrevocable backing of family members, trusts and other shareholders with 54.7% of the shares. Robert Fleming founded the Scottish American Investment Trust in Dundee to channel the wealth of the jute industry into the new American railroads. It was Scotland's first trust, and second in the UK only to Foreign & Colonial, founded five years earlier. The London-based bank, which still employs 20 Fleming family members, now has #70bn under management, operations in 40 countries and 7800 employees, with over 80% of its assets in international equities and particular strength in the Far East. Chase Manhattan, which has been desperate to develop its equity and securities business having failed to take over Merrill Lynch, manages #146bn. Bill Harrison, chairman and chief executive of Chase, said: ''If you like the growth prospects for Asia and Europe then you will like this transaction.'' Roddie Fleming, a fourth- generation family member who took over as chairman of Flemings this month, said: ''After such a long association with the family I can think of no better company to take our business forward. There is very little overlap between the businesses. The emphasis is on revenue growth, not cost savings.'' Chief executive William Garrett, who will become chief executive of Chase Fleming, said the bank had just completed a record year but recognised ''that global markets require global reach''. The deal values the unlisted Fleming at 2744p a share, compared with the 1202p last valuation, and six investment trusts managed by Fleming will share around #250m in enhanced asset values. Edinburgh Investment Trust's asset value gets a 20p boost to 637.2p and Dunedin Income Growth, the successor trust to the original Scottish American, has lifted its net asset value from 260.8p to 269.73p. Three Glasgow-managed Murray Johnstone trusts are among the biggest beneficiaries thanks to large stakes held since the 1930s and will share a windfall of #102m.

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