Asset managers continue to fall like nine pins. This time the target is New York-based Sanford C. Bernstein, Inc. and the buyer is Alliance Capital Management Holding L.P. also based in New York. Alliance is itself a unit of the Equitable which is in turn part of the France-domiciled AXA Group which also owns Donaldson, Lufkin & Jenrette.

The total value of the deal is a relatively pricey $3.5 billion. This amount includes $1.5 billion in cash and roughly $2.0 billion of newly-issued limited partnership units of Alliance Capital. Bernstein manages $86 billion in assets making the price tag equal to 4.06 percent of assets under management.

To complete the deal Alliance will issue 40.8 million new units of its limited partnership. AXA Financial, Inc., will provide the cash for the transaction buy purchasing newly issued Alliance Capital limited partnership units for $1.6 billion. The consideration may be adjusted downward if a certain base level of Bernstein client revenues is not achieved at closing.

After the deal Alliance will manage approximately $475 billion of assets under management and annual revenues of about $3.2 billion. The combined firm will have 4,000 employees and will manage investment assets for approximately 2,600 institutional and 15,000 private client accounts. It will manage $189 billion in mutual fund assets in 5.8 million mutual fund shareholder accounts worldwide.

Sanford Bernstein was founded in 1967 and is the a value-oriented manager focusing primarily on institutional assets and the high net worth market. It is also known as for its research including its "black books".

"We are very pleased to be joining forces with Sanford C. Bernstein Inc.," said Bruce W. Calvert, chief executive officer of Alliance Capital. "Research excellence has long been the cornerstone of efforts to provide superior performance for clients at both firms. Together, we will have one of the premier equity and fixed income investment research capabilities in the world, with 250 research analysts around the globe."

"Overall, we believe that the combined business will demonstrate higher and more stable earnings growth than either of us might achieve independently," he concluded.

"After much success during the last 32 years as an independent organization, we are about to embark on a course that promises to open far larger opportunities for our clients and for us," said Lewis A. Sanders, chairman and chief executive officer of Bernstein. "The Alliance Capital -- Bernstein partnership is not about cost reduction; there is only modest overlap. It is about bringing together two outstanding organizations with highly complementary skills. The scale and balance of the combined firms should lead to high client satisfaction and therefore faster and more predictable growth."

Alliance Capital retained The Blackstone Group and Salomon Smith Barney as financial advisors to the transaction. Bernstein retained Merrill Lynch and AXA Financial, Inc. retained Donaldson, Lufkin & Jenrette and Goldman, Sachs & Co.  

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