Morgan Stanley (NYSE: MS) announced Monday it has agreed to sell its retail management business in a cash and stock deal to Invesco Ltd. (NYSE: IVZ) for $1.5 billion. The move comes as the investment bank looks to refocus on its institutional client base, such as corporations, pension plans and sovereign wealth funds.
The deal calls for a $500 million cash payment and 44.1 million shares of Invesco, which represents about $1 billion in equity of the money management firm. The equity stake will make Morgan Stanley the largest holder of Invesco, with a 9.4 percent share.
James Gorman, Co-President of Morgan Stanley, said, “Our objective in Asset Management is straightforward: deliver superior performance for our clients, return our investment business to strong and consistent profitability, and reignite a best-in-class investment culture. This transaction is an important step in that direction.”
The deal, which included Morgan’s Van Kampen unit, raises Invesco’s assets under management by roughly $119 billion to about $536 billion.
“We are excited to expand the depth and breadth of our investment strategies, which will enable us to offer our clients a truly comprehensive range of investment capabilities through an expanded set of investment vehicles,” said Martin L. Flanagan, Invesco president and CEO, in a press release.
The board of directors from both firms have approved the deal, which is expected to close sometime in the middle of 2010.
The deal not only grows Invesco’s assets under management, but will also give the firm roughly 700 investment advisors across all major markets around the world.
Invesco’s Chief Financial Officer Loren Starr stated in the company’s press release that the deal should add about 11 percent to profits come 12 months after closing.
Flanagan and Starr will host a conference call Tuesday morning at 10am ET., to discuss the transaction.
