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Rating:Fund Companies On The Block? Not Rated 3.0 Email Routing List Email & Route  Print Print
Monday, November 22, 1999

Fund Companies On The Block?

Reported by Jason Shank

Two rumors have been floated in the last few weeks with several industry sources independently confirming the news, but adding little to the details.

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Franklin Resources, Inc.
Montgomery Asset Management
The first is that Montgomery Asset Management, acquired in early 1997 by Commerzbank, is back on the block after two and a half years due to the German bank's dissatisfaction with the San Francisco firm's additions to the bottom line.

Although several people from widely disparate sides of the asset management industry have heard the rumor, nothing concrete is known of the possible buyer(s). Montgomery could prove a tough sell in such a low margin business, especially if Commerz wants to get back the approximately 5% price/assets price that it reportedly paid in 1997. According to one industry source, its apparent short-term outlook reflected in large turnover rates and an ad message that's constantly changing could scare off many potential suitors.

Although a spokesperson at Montgomery had been hearing the same whisperings, the company does not comment on industry rumors.

But Montgomery might sell before the other company that's being shopped, the country's fifth largest fund complex, Franklin Resources Inc. (BEN), investment advisors to the Franklin Templeton Funds and the Mutual Series Funds. The rumor circulating seems to waver between the sale of the entire company, public since 1971, and the sale of some portion of the asset management business.

As with several other large load families, San Mateo-based Franklin Templeton has had redemption problems of late and Michael Price's Mutual Series Funds have also bled off considerable assets. The company also laid off 560 employee at the beginning of the year, seven percent of its workforce.

Charles Johnson, president and CEO and Rupert Johnson, chief investment officer of Franklin reportedly turned down a very attractive offer from Allianz in 1998, asserting that they wanted to retain control of the company for their children. Allianz has since acquired Pimco.

Franklin's stock price is essentially flat since early 1997 and has fallen below the bogey of the S&P 500 benchmark for most of 1999.

A Franklin spokesperson responded to inquiries that company policy would not allow comment on rumors. 

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