Ameriprise Financial, Inc. ( AMP Quick Quote AMP - Free Report) has announced a definitive agreement with Canada-based BMO Financial Group to take over its EMEA asset management operations for roughly $845 million, in order to further strengthen the company’s wealth and asset management businesses. The all-cash deal, expected to close in the fourth quarter of 2021, is still subject to regulatory approval in the relevant jurisdictions.
Following the announcement, shares of Ameriprise have rallied 2%.
Ameriprise expects the acquisition to create additional value through the inclusion of certain capabilities like “Responsible Investment, Liability Driven Investing, Fiduciary/outsourced Management and European Real Estate” which can be leveraged globally. Further, BMO Financial's publicly-traded investment trusts will act as tailwinds for Columbia Threadneedle Investments’ (Ameriprise’s asset management arm) closed-end fund.
Jim Cracchiolo, chairman & chief executive officer (CEO) of Ameriprise, noted, “BMO’s EMEA asset management business will be a great addition to Columbia Threadneedle that will deliver meaningful value for clients and our business. This strategic acquisition represents an important next step as we expand our solutions capabilities, broaden our client offering and deepen our talented team."
Per Ted Truscott, CEO of Columbia Threadneedle, “Establishing a new strategic relationship with BMO Wealth Management is an important benefit of the transaction. We will bring an even stronger set of capabilities to serve the needs of their Wealth Management clients in Canada and the U.S."
Synergies & Other Financial Benefits
Ameriprise projects the acquisition to be accretive in 2023, with an internal rate of return of 20%.
Additionally, following the completion of the deal, the company will have more than $1.2 trillion of assets under management and administration.
Also, the deal is likely to boost Columbia Threadneedle’s asset under management (AUM) to $671 billion. Further, the transaction will boost Columbia Threadneedle’s EMEA AUM and thus, expand the region's AUM to 40% of the total. The transaction will add $124 billion of AUM in Europe.
The deal will complement Columbia Threadneedle’s core business and global growth strategy. Apart from this, it will solidify Ameriprise’s position in the European institutional market with an expansion in investment capabilities and solutions to broaden client offerings.
In addition, the strategic alliance will give BMO Wealth Management’s North American Wealth Management clients’ accessibility to a range of Columbia Threadneedle investment management solutions. In the United States, it will offer the opportunity for certain BMO asset management clients to move to Columbia Threadneedle, subject to client consent.
Ameriprise has been engaged in a number of strategic acquisitions, which reflects its solid balance sheet and liquidity position. Its largest acquisition to date was in 2009, when it acquired Columbia Management Investment Advisers. These expansion initiatives will continue boosting its profitability and market share as well as help diversify revenues.
Over the past six months, shares of Ameriprise have rallied 47.4%, outperforming the
industry’s 27.9% rally.
Currently, Ameriprise Financial carries a Zacks Rank #2 (Buy). You can see
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