Is Amvescap now for sale? Amvescap's top brass say "No" to an unsolicited offer from Canada's CI Funds.

Word of the possible deal was first reported in Wednesday's Financial Post. The Canadian newspaper said that CI Financial, the third largest Canadian fund firm, is mulling over making a $7 billion for the London-based Amvescap. Sources told the paper that CI is likely arranging financing from banks and hedge funds to do the deal.

However, Amvescap officials moved quickly to quash talk of a deal, though they confirmed that CI Funds had made an unsolicited offer for its AIM Trimark unit and expressed interest in a deal to buy the entire firm. That offer was rejected by Amvescap's board.

"AMVESCAP confirms that it has received an unsolicited indicative approach from CI to acquire AMVESCAP's Canadian operation. The Board of Directors of AMVESCAP has considered this indicative approach and has unanimously concluded that it is not in the best interests of shareholders," stated Amvescap officials in a prepared release.

"CI has also indicated that it might have an interest in attempting to acquire the whole of AMVESCAP though it has given no indication of any conditions or financing arrangements. The board of AMVESCAP doubts that CI has the ability to make a firm offer for AMVESCAP at a level that would be in the best interests of AMVESCAP's shareholders."

CI's motivation seems an odd one. According to the report, CI would sell Amvescap's non-Canadian properties and keep the AIM Trimark unit. In essence, CI would be buying the dog to keep the tail. In a second scenario, CI could purchase Amvescap in partnership with SunLife Financial, the parent of the Boston-based MFS Funds. In that case, SunLife would keep the U.S. and European units while it takes home AIM Trimark.

The paper also quotes an unnamed source as stating that CI is in competition with a number of other suitors for Amvescap, including UBS and Deutsche Bank.

A sale of Amvescap would surprise no one. The firm, which is listed on the London Exchange, has been subject to a number of takeover rumors spread by stock traders in the past two years. Nothing has come of those rumors, however.

It has also faced challenges retaining clients in wake of allegations that some senior executives helped market-times improperly trade shares in its Invesco Funds family. Those funds have since been folded into the AIM Funds brand.

More recently, Amvescap sold its U.S.-based defined contribution business to Merrill Lynch and put its smaller, U.K.-based DC business on the block. Its board is also in the process of searching for a new CEO.

A price of $7 billion would provide a roughly $1.3 billion premium to Amvescap's closing price on Tuesday. The stock jumped 12.8 percent on the open Wedensday and traded as high as $14.10 in morning trading. 

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