Old Mutual extends US reach with $2bn UAM acquisition

Old Mutual, the life and pensions group, extended its reach into the US market yesterday, with an agreed deal to buy United Asset Management - one of the world's biggest investment management companies - for $2.22bn in cash and assumed debt.

Old Mutual, the life and pensions group, extended its reach into the US market yesterday, with an agreed deal to buy United Asset Management - one of the world's biggest investment management companies - for $2.22bn in cash and assumed debt.

The company said it would offer $25 per share, or $1.46bn, and take on debt of $769m. Completion of the deal will see it triple global funds under management to $275bn.

UAM, founded in 1980 by former Puttnam head Norton Reamer, is listed on the New York Stock Exchange and manages $188bn in assets under 42 autonomous brands, of which nine - including Glasgow firm Murray Johnstone, Rogge Global Partners and Pilgrim Baxter - manage two-thirds of funds.

Old Mutual's chairman and chief executive Mike Levett said: "This transaction will be a major step towards our aim of developing a focused and co-ordinated global asset management business. We anticipate that the transaction will be immediately accretive to Old Mutual's cash EPS."

The acquisition will give Old Mutual opportunities to cross-sell investment products to UAM customers.

Since its demutualisation and IPO last July, Old Mutual has focused on expansion and in March bought the banking and wealth management specialists Gerrard Group.

The finance director, Eric Anstee, said Old Mutual could offload some of UAM's non-core assets.

He said: "We will be looking at where we can improve management and build critical mass horizontally. Inevitably there's going to be some rationalisation but we need to meet with each affiliate for discussions and some will want to take independence.

"We are focusing on a number of businesses and the strategy is definitely to take a core and build a coast-to-coast consolidated business."

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