Old Mutual expands in US with $1.46bn UAM purchase

Old Mutual, the London-listed fund manager, yesterday said that it is buying Boston-based fund group United Asset Management (UAM) for 1.46 billion dollars, tripling South Africa-based Old Mutual’s global funds under management to 275 billion dollars.

The deal values UAM at 25 dollars per share and at 7.3 times its reported earnings of 306 million dollars, before interest, taxes, depreciation and amortisation, in the 12 months to 31 May. Mike Levett, Old Mutual chairman and chief executive, said that the deal would have an immediate positive impact on the company’s earnings per share.

Mr Levett said: “We believe this transaction has considerable benefits….We expect there to be significant opportunities for cross selling and distribution of investment products into Old Mutual’s client base. We believe this transaction will be a major step forward towards our aim of developing a focused and coordinated global asset management business.”

Old Mutual has concentrated on expanding its asset management businesses in Europe and the US ever since it demutualised and floated on the London market in July 1999. In March this year, Old Mutual bought Gerrard, a UK specialist banking, financial services and private client stockbroking and wealth management business. UAM offers a broad range of investment management services to institutions, mutual funds and wealthy individual investors.

These services are offered through a diverse group of operating firms that managed more than 188 billion dollars on 31 May for clients throughout the US, Canada and abroad. Reuters