Columbia Threadneedle has acquired the European investment arm of BMO Canada
U.S. asset manager Columbia Threadneedle has agreed to buy a European investment branch of BMO Financial Group in Canada for $ 845 million, a recent example of the ongoing merger and acquisition activities in the fund management industry.
The race to build larger asset management businesses has accelerated due to intense competitive pressures and structural challenges, including demographic change, quota wars and rising costs, changing technology spending and regulatory requirements.
Columbia Threadneedle’s active management will be $ 671 billion, along with BMO’s $ 124 billion acquisition of the business in Europe, the Middle East and Africa. The agreement will lead to new investment teams overseeing real estate, pensions and responsible investment strategies under the control of the U.S. asset manager.
“Buying BME’s Female Asset Management business will increase and enhance our strengthened strengths,” said Ted Truscott, CEO of Columbia Threadneedle. “It puts us in a good position to meet the development needs of our customers.”
The group, led by the F&C Investment Trust, was founded in 1868 and is the oldest trusted investment in the world, transferring from BMO to Columbia Threadneedle as part of the agreement. BMO bought London-based F&C Asset Management for $ 708 million in 2014, when it was overseeing $ 127 billion in assets.
Nick Ring, head of operations for Columbia Threadneedle’s Female and Asia, will lead the expanded team.
Truscott said he expected the “vast majority” of BMO’s 800 female employees to join the Columbia Threadneedle, and refused to scale for possible job losses. Columbia Threadneed also did not want to disclose the cost-saving and revenue-synergies of its purchases.
The price paid by Columbia is equivalent to 0.7% of BMO’s European assets, a relatively modest valuation.
“We are a disciplined buyer and we have paid a fair price,” Truscott said. “This transaction will be based on a record of successful purchases for the benefit of customers and our other stakeholders.”
The acquisition is expected to “slightly improve” earnings from 2023 onwards from Ameriprise, a U.S.-listed financial services group that owns Columbia Threadneedle.
Truscott said the deal would create an internal return of 20 percent and would not affect Ameriprise’s ability to return capital to investors through dividend payments or share purchases.
Ameriprise stock prices have risen about 133 percent in the last 12 months. The agreement is expected to be completed in the fourth quarter of 2021, subject to regulatory approval.