Australian bank Macquarie Group has inked a deal to buy Philadelphia-based Delaware Investments from Lincoln Financial for $428 million in cash. The purchase price works out to be about 0.33 percent of Delaware's AUM of $126.7 billion at the end of June (click here to see the related story on the pricing). The deal is expected to close around yearend.

Patrick Coyne Delaware Investments President

Buzz around a possible sale of Delaware sale first surfaced in April. Aberdeen Asset Management, which purchased Nationwide's active equity investment management business in a deal that closed in July of last year, was reportedly one of the other bidders for Delaware. Late last month, however, Aberdeen CEO Martin Gilbert quashed speculation by saying his company was "definitely not pursuing" Delaware.

Delaware was the 69th largest mutual fund firm at the end of June, with $19.18 billion in fund assets, according to Lipper data.

Delaware president Patrick Coyne and his management team will continue to run Delaware. Coyne will report to Ben Bruck, executive director of Macquarie Funds Group and head of Macquarie’s Affiliated Managers Division. Bruck will move to Philadelphia.

Lincoln was advised by Goldman Sachs. Macquarie's financial advisor was Macquarie Capital (USA) Inc.. Weil, Gotshal & Manges LLP provided legal counsel.

Delaware Investments 2005 Market Street Philadelphia, PA 19103 215- 255-1200 Founded: 1929 AUM: $125 Billion (end-June) Employees: 580 Click here to view the complete profile.

"Macquarie is the perfect partner for us," Coyne said in a news release. "They are strong supporters of Delaware’s investment teams and their processes, our management team and our multi-boutique structure. Macquarie's desire to invest in and grow our product and distribution capabilities will be well received by our clients and our people."

Ben Bruck Macquarie Funds Group Executive Director

Delaware will continue to manage Lincoln Financial's general account insurance assets under a long-term contract, and will provide additional sub-advisory services.

The distribution team for Delaware's funds and separately managed accounts will move from Lincoln Financial Distributors to Delaware Investments.

Lincoln Financial executives said the proceeds of the Delaware sale will be used for general corporate purposes. This includes the possibility of retiring a portion of the Capital Purchase Program preferred shares outstanding "when it is appropriate to do so," officials said.

"We believe the greatest opportunities for growth and differentiation for Lincoln Financial going forward are centered on our principal insurance and retirement businesses," said Lincoln Financial president and CEO Dennis Glass. "This transaction will allow us to focus both management and capital resources on these core businesses."

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Press Release from Lincoln

PHILADELPHIA, Aug. 19 /PRNewswire-FirstCall/ -- Lincoln Financial Group (NYSE: LNC) today announced that it has signed a definitive agreement to sell Delaware Management Holdings, Inc. and its subsidiaries (Delaware Investments), its asset management unit, to Macquarie Group, a Sydney, Australia-headquartered global provider of banking, financial, advisory, investment and funds management services. Lincoln Financial expects to receive cash consideration of approximately $428 million, subject to certain closing adjustments. The transaction is expected to close on or around December 31, 2009, subject to regulatory approvals and other customary closing conditions.

"We believe the greatest opportunities for growth and differentiation for Lincoln Financial going forward are centered on our principal insurance and retirement businesses," said Dennis R. Glass, President and CEO, Lincoln Financial Group. "This transaction will allow us to focus both management and capital resources on these core businesses."

Delaware Investments will continue managing Lincoln Financial general account insurance assets under a long-term contract, and will provide additional sub-advisory services. Lincoln Financial remains committed to providing access to high-quality asset management services by selecting best-in-class sub-advisors, including Delaware Investments, for its retirement and insurance products.

Glass added, "We look forward to continuing our strategic relationship with the Delaware Investments team as it becomes a key part of Macquarie's global asset management platform."

By close, Lincoln Financial expects that its distribution team for Delaware Investments' funds and separately managed accounts will move from its wholesale distribution arm, Lincoln Financial Distributors, Inc., to Delaware Investments.

The proceeds of the sale will be used for general corporate purposes, including potentially contributing to retiring a portion of the CPP preferred shares outstanding when it is appropriate to do so.

Goldman, Sachs & Co. acted as financial advisor to Lincoln Financial Group.

About Lincoln Financial Group

Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE: LNC) and its affiliates. With headquarters in the Philadelphia region, the companies of Lincoln Financial Group had assets under management of $181 billion as of June 30, 2009. Through its affiliated companies, Lincoln Financial Group offers: annuities; life, group life and disability insurance; 401(k) and 403(b) plans; savings plans; mutual funds; managed accounts; institutional investments; and comprehensive financial planning and advisory services. Affiliates also include: Delaware Investments, the marketing name for Delaware Management Holdings, Inc. and its subsidiaries; and Lincoln UK. For more information, including a copy of our most recent SEC reports containing our balance sheets, please visit www.LincolnFinancial.com.

 

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