Ameriprise recently announced to media that a definitive agreement has been signed with BMO Financial Group to acquire its EMEA asset management business for $845 million. It is said to be an all-cash transaction that adds $124 billion of assets under management (AUM) in Europe. It may close in the fourth quarter of this year subjecting to regulatory approvals in the relevant jurisdictions.
The acquisition is expected to further accelerate the company’s core strategy of growing its fee-based businesses and also increase the overall contribution of Wealth Management and Asset Management within its diversified business. The assets under management and administration of Ameriprise will shoot up to $1.2 trillion.
It will also be complementing Columbia Threadneedle Investments’ core business and global growth strategy. This adds to a substantial presence in the European institutional market and the expansion of its investment capabilities and solutions to meet the client’s demand. Columbia Threadneedle’s AUM is also expected to increase to $671 billion which will eventually increase the AUM of EMEA and expand up to 40 percent in the region. In the US the transaction also includes the opportunity for few BMO asset management clients to move to Columbia Threadneedle which is subject to the consent of the client.
By 2023, the transaction is expected to be accretive and generate a 20 percent internal rate of return. Considering the firm’s substantial excess capital position and free cash flow generation, the company’s capital return strategy continues to remain on track. Jim Cracchiolo, chairman and chief executive officer of Ameriprise addressed the media and said, “This strategic acquisition represents an important next step as we expand our solutions capabilities, broaden our client offering and deepen our talented team.” He also added that they believe this transaction would build on their track record of successful acquisitions for the benefit of clients and other stakeholders.