A deal, which may be announced within days and perhaps even before this weekend, is likely to rank among the biggest ever consummated involving a US mutual fund company. The expected price tag for New York-based Scudder is likely to be between $1bn and $1.5bn (pounds 615m and pounds 922m).
Talks have been going on for several weeks between Scudder, which is privately-held, and as many as six serious suitors. Executives at Scudder are known to favour selling to a European bank on the grounds that Europeans are thought to be ready to pay more for the firm.
Union Bank of Switzerland (UBS) is known to have been among the most ardent candidates to acquire Scudder. A UBS source said that while the bank remained fully engaged in negotiations it faces strong competition from several other banks.
If the firm is sold instead to a domestic US buyer, the most likely candidate is thought to be Chase Manhattan Bank. Chase already has its own mutual fund operations in the US. UBS, by contrast, has virtually no mutual fund presence in the US. Its main activity here is in investment banking.
The European appetite for acquisitions in the US was highlighted only last week by the sale of Dillon Read, the mergers and acquisitions boutique, to SBC Warburg of London. Warburg paid $600m for the firm, considered by most observers to be unexpectedly generous.
A spokesman at UBS in New York, David Walker, refused to comment on Scudder. "We don't comment on market rumours", he said. But UBS has already stated that it is interested in broadening its position in New York. "We would consider a money management acquisition in the US", Mr Walker said.
Founded 78 years ago, Scudder has $115bn in assets under management, including $37bn in mutual funds. Like all mutual fund firms in the US, it has benefited from a huge increase in inflows over the past two years that has matched the sharp gains in the US stock markets. Those flows slowed in March, as the market dipped, but recovered somewhat during April and this month.
Scudder's strength derives in part because of its 12-year-old position as the exclusive seller of funds for the American Association of Retired Persons. The arrangement gives Scudder - and by extension any bank that buys it - a direct pipeline into one of America's largest associations.
Moreover, the company last month landed a similar exclusive arrangement with the American Medical Association, which promises to open up a pool of well-heeled and prosperous potential investors.
A Scudder spokeswoman declined yesterday to make any comment on the possible sale.Reuse content