UPDATE: Bank Of America To Sell Asset-Management Unit To Ameriprise
September 30 2009 - 9:42AM
Dow Jones News
Bank of America Corp. (BAC) agreed to sell the stock and bond
mutual fund business of its Columbia Management unit to Ameriprise
Financial Inc. (AMP) for as much as $1.2 billion.
Once the transaction closes in the spring, Ameriprise's
asset-management business will have global assets under management
of nearly $400 billion and become the eighth-largest U.S. manager
of long-term mutual funds, it said.
Bank of America said last May it would sell Columbia as part of
a plan to raise capital. Bank regulators had told Bank of America
to raise $33.9 billion after the government conducted a stress test
of the nation's biggest banks.
The bank finished raising the capital as mandated earlier this
year, but indicated it would proceed with a sale of Columbia. Bank
of America also said in May that it would try to sell its retail
bank First Republic, although the bank has yet to announce a buyer
for that business.
Columbia's long-term asset-management business, which includes
the Columbia mutual funds and other private assets managed by
Columbia, had about $165 billion in equity and fixed-income assets
under management as of June 30.
Bank of America will retain Columbia's cash-management
business.
The acquisition is expected to begin adding to Ameriprise's
earnings and return on equity within a year, excluding integration
costs, it said.
In premarket trading, Bank of America shares rose 0.9% to $17.31
while Ameriprise climbed 11% to $36.00.
The total to be paid to Bank of America is expected to be
between $900 million and $1.2 billion, based on net asset flows,
Bank of America said.
Ameriprise Chairman and Chief Executive Jim Cracchiolo said the
deal "transforms our asset-management business, a core component of
our integrated-business model, and will significantly accelerate
our growth." The combined business will serve a broad range of
investors.
The asset-management industry has been ripe for deals this year.
The biggest deal of 2009 was BlackRock Inc.'s (BLK) $13.5 billion
acquisition of Barclay's Global Investors.
In addition, Morgan Stanley (MS) is shopping around its Van
Kampen fund business. There has been some speculation that money
managers like Invesco Ltd. (IVZ), Nuveen or Franklin Resources Inc.
(BEN) might be among the likely suitors.
-By Marshall Eckblad and Mike Barris, Dow Jones Newswires;
212-416-2156; mike.barris@dowjones.com