American Express, the US financial services company, yesterday planted a major footprint on the UK when it confirmed it had bought Threadneedle for £340m from Zurich Financial Services.
The acquisition of one of Britain's largest fund managers, which has £44bn under management, is likely to be a platform for further expansion for the US company in this country and on the Continent.
American Express paid less than the £500m that ZFS had reputedly been looking for as part of its attempt to sell assets to repair its balance sheet.
The price was also worth less than 1 per cent of Threadneedle's assets under management, compared with the 10 per cent of assets some investment businesses were sold for in the boom of the Nineties.
Under the terms of the deal, Threadneedle will continue to manage money for Zurich, whose businesses include Eagle Star and Allied Dunbar, for the next eight years, provided it hits certain performance criteria.
Securing the Zurich cash is a boon for American Express, as it makes up nearly 50 per cent of the assets that Threadneedle manages.
"Fees on in-house money don't tend to be as good as assets from third parties, but they are a reliable source of income," one analyst said.
American Express said it would retain Threadneedle's management team, led by Simon Davies, the chief executive. Mr Davies will report to Jim Cracchiolo, group president of American Express global financial services. The company said the deal was about "growth rather than cost cutting". The company has $228bn (£152bn) of assets under management but only $4bn of those are in the UK. It said any redundancies that take place as a result of the acquisition will be minimal.
Mr Cracchiolo said: "The decision to acquire Threadneedle is part of our overall strategy to expand our financial services business globally. We see tremendous potential for long-term growth in the European asset management market."
American Express is the fourth biggest credit card issuer in the US, and its biggest UK business at the moment is card issuance. It said the acquisition was an attempt to take advantage of long-term shifts in Europe, such as individuals having to save more for their pensions.
Threadneedle is the second-largest retail investment fund manager in the UK by assets under management. ZFS put it on the market in an attempt to repair its own balance sheet, battered by an over-ambitious expansion strategy and the extended bear market.Reuse content