Marsh & McLennan Companies, Inc. (MMC) announced today that Great-West Lifeco Inc., a financial services holding company controlled by Canada-based Power Financial Corp., has signed a definitive agreement to purchase Putnam Investments. The sale price is $3.9 billion in cash, subject to certain customary adjustments. Putnam is one of the largest investment management firms in the United States, with $192 billion under management at the end of 2006.
The transaction has been approved by the respective boards of directors of MMC and Great-West Lifeco, and is expected to close in the middle of this year, subject to regulatory approval, required client consents, and other customary conditions.
Michael G. Cherkasky, MMC’s president and chief executive officer, said, “This is an important transaction for MMC and its shareholders. We will receive an attractive price for Putnam, strengthen our ability to focus on our core businesses, and significantly enhance our financial flexibility. Selling Putnam is another important step in enhancing long-term shareholder value and driving additional success in our risk and human capital businesses.
He added that the proceeds to MMC from this sale will allow his company to invest in its business, stock repurchases, and debt reduction.
Assuming the transaction closes as expected in mid-year, MMC estimates that the sale would have a mildly dilutive impact on 2007 earnings per share of approximately five cents.
Goldman, Sachs & Co. and Merrill Lynch & Co. acted as MMC’s financial advisors for the transaction. Davis Polk & Wardwell acted as MMC’s legal counsel.
Putnam Investments, with approximately 3,000 employees, is a global money management firm with $192 billion in assets under management, over 200 institutional clients, and over 9 million shareholders and retirement plan participants.
Source: Marsh & McLennan Companies
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