- Macquarie Group is strengthening its asset management business with a $2.3 billion US-based acquisition.
- Macquarie Asset Management, which contributes to the majority of earnings of Macquarie Group, would become a top 25 asset management firm.
ASX 200 heavyweight Macquarie Group Limited (ASX:MQG) is adding more firepower to its asset management business. Macquarie Asset Management is acquiring Waddell & Reed Financial, Inc., an NYSE-listed asset and wealth management company.
Since the crisis lowered investor expectations, large companies are looking to find to bargain at this moment. Macquarie Asset Management remains a cash cow for the group and is set to become stronger after the deal.
The deal also represents Macquarie’s commitment to increase its annuity-style revenues. Waddell & Reed shares have surged in the after-hours trading as the deal was disclosed by Macquarie Group.
© Kalkine Group 2020
Macquarie Group is paying around $2.3 billion or US$1.7 billion. The purchase price represents US$25 per share consideration in cash.
It has also agreed to sell Waddell & Reed’s wealth management platform to LPL Holdings Inc., which would also become a top tier strategic asset management partner of Macquarie.
The Making of Asset Management Giant
Macquarie Asset Management would have an asset under management of over US$465 billion after the completion of the transaction. The combined business would fall within the top 25 asset managers in the US mutual fund industry.
Waddell & Reed has a rich history of providing investment and wealth management since 1937. Its investment products are labelled under the IVY INVESTMENTSTM brand.
At the end of September, Waddell & Reed had AUM of US$68 billion and asset under administration of US$63 billion in the wealth management business.
© Kalkine Group 2020
Subject to approvals, the transaction is expected to close by mid-2021. The transaction is also backed by the Board of LPL Holdings, Macquarie Group and Waddell & Reed.
The partnership with LPL Holdings would enable Macquarie to service the existing wealth management clients and provide long-term opportunities. Macquarie would be selling wealth management platform to LPL Holdings for US$300 million.
On 3 December 2020 (AEDT 02:17 PM), MQG traded at $ 138.830, up by 0.354% from the previous close.