Liberty Cracks the Nut
   The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
Monday, June 12, 2000

Liberty Cracks the Nut

Last week's rumors that Liberty Financial was negotiating for Wanger Asset Management were on target.
Related Links
 Liberty Financial
 Wanger Asset Management
On InvestmentWires
 Liberty Confirms Wanger Talks
Jun 8 2000
 Liberty Funds Names Retail Marketing Head
Mar 29 2000
 Liberty Sets Its Marketing Free
Jan 10 2000
 Wanger Hires New Head Marketer
May 26 1999
This morning Liberty announced that it is purchasing the Chicago-based manager of the Acorn Funds for $280 million in cash. Liberty will also pay up to an additional $170 million, also subject to adjustments in certain circumstances, in cash over five years, contingent upon the attainment of certain earnings objectives.

The base price of the deal works out to 3.1% of Wanger's $8.8 billion in assets under management, or roughly in-line with the price paid for other asset management firms. If Acorn hits earnings objectives the price of the deal will jump to 5.1% of assets -- a price on the high end of recent deals. Liberty Financial said that it expect to fund the transaction with $80 million of cash and investments, and $200 million of debt issued to Liberty Mutual Insurance Company or third parties. The deal is likely to close in the fourth quarter.

One fallout of the deal will be a shift in Acorn's distribution strategy. The now no-load Acorn funds will be renamed, taking the Liberty prefix, and will adopt similar load and sales commission structures as Liberty's funds. Liberty Funds Distributor will sell the Acorn funds through intermediary channels including major brokerage firms, banks and financial planners. Additionally, Liberty Financial intends to also offer the funds through its bank distribution company, Independent Financial Marketing Group.

Under the terms of the agreement the company's principals, including Ralph Wanger, will sign five-year employment contracts. Salomon Smith Barney and Goldman Sachs acted as financial advisors in the transaction to Liberty Financial Companies and Wanger Asset Management, respectively. Choate, Hall & Stewart acted as legal advisor to Liberty Financial in the transaction, and Sullivan & Cromwell acted as legal counsel to Wanger.

Printed from:

Copyright 2000, InvestmentWires, Inc.
All Rights Reserved
Back to Top