Franklin Resources Inc, a global investment management firm that operates as Franklin Templeton, plans to acquire asset manager Putnam Investments from Great-West LifeCo Inc in a nearly $925 million deal.
The deal, expected to close in the fourth quarter of this year, is part of a partnership with Power Corporation of Canada, the parent company of subsidiaries including Great-West and IGM Financial.
The acquisition will beef up Franklin’s retirement and insurance products amid fierce competition among investment managers. Last year, it agreed to buy European credit manager Alcentra from Bank of New York Mellon Corp to expand its footprint in the alternative credit market.
Franklin will pay $825 million in stock at deal close, while $100 million in cash will be paid 180 days later. In addition, the California-based company, which manages nearly $1.4 trillion in assets as of April 30, will pay up to $375 million tied to revenue growth targets from the partnership.
The deal, consisting primarily of equity, will see Great-West become a long-term strategic shareholder in Franklin Resources with a nearly 6.2% stake, according to the investment management firm.
Putnam, which was founded in 1937, is an active asset management firm with $136 billion in assets under management (AUM) as of April 2023. The AUM excludes $33 billion of assets in PanAgora, a quantitative investment manager owned by subsidiaries of Power, which is not a party to the transaction.
The deal will materially increase Franklin’s defined contribution assets by more than $90 billion, expand its insurance assets to nearly $150 billion and also provide a cash tax benefit, Jefferies analysts wrote in a note on Wednesday.
Ardea Partners LP served as lead financial advisor to Franklin Templeton while Morgan Stanley and Rockefeller Capital Management served as financial advisors to Great-West and Putnam.
Source: Reuters.com