is planning to restructure and better capitalize on the brand of Pilgrim Baxter and Associates
. The London-based firm recently purchased United Asset Management
, Pilgrim's parent. Now it is paying Pilgrim's two principals $220 million for fifty-two percent of the pair's revenue sharing interests.
Old Mutual retains the option to purchase the remaining interest in a half-dozen installments through 2002 for $420 million. Gary Pilgrim
and Harold Baxter
had an agreement with United Asset Management which is estimated to pay out thirty-five percent of revenues this year.
Pilgrim Baxter is seen by some as the jewel in the crown of UAM companies despite its troubles several years ago; Old Mutual is now indicating that the company may be fashioned as the centerpiece of a mutual fund multiplex.
"Pilgrim Baxter is a big piece of their plans because they have an excellent brand name," said a spokesman for the firm. "The important thing about this deal is that Old Mutual has made a big investment in Pilgrim Baxter. They have incentivized portfolio managers and key employees at the company."
Old Mutual also plans to franchise sub-advisors and take advantage of Pilgrim Baxter's distribution network. While Old Mutual is diversified across the financial services industry, the UAM acquisition and reorganization indicate a commitment to the mutual fund industry.
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