Aberdeen Asset Management plc has entered into an agreement with Deutsche Asset Management Group Ltd. to acquire certain fund management businesses for about £265 million in cash.

The final price is subject to a number of adjustments depending upon the level of assets under management actually transferring with the business. However, the initial cash consideration is expected to be £200 million, and the total adjusted consideration is not expected to exceed £245 million.

It will pay up to £165 million in cash on completion to acquire a global fixed income business, a UK-based open-ended investment company business, a London-based UK and global equities business and a London-based multi-asset business. The final price will also include an amount equal to the net asset value of the businesses at completion, expected to be between £35 million and £55 million.

The acquisition will be partly financed by a £215 million new issue. A £2.9 million break fee is also part of the deal.

The businesses involved in the deal largely comprise the former Morgan Grenfell Asset Management operations, which were acquired by Deutsche Bank in 1989. As of May 31, they had assets under management of £46.3 billion with annualized run-rate management fees at that date of £119.3 million. Yet, for the year ended December 31, 2004, they lost £77.2 million before tax. Aberdeen says it expects to operate the businesses from a much-reduced cost base.

“This is a transformational acquisition for Aberdeen. We are acquiring some world-class businesses that will substantially increase our scale and diversify our revenue streams,” said Martin Gilbert, chief executive of Aberdeen.