Franklin Templeton To Buy Putnam Investments For $925 Mln

Franklin Resources, Inc. (BEN) or Franklin Templeton, an investment management firm, said on Wednesday that it agreed to buy Putnam Investments, from Great-West Lifeco Inc. (GWO.TO), a Canadian insurance focused financial holding firm, for around $925 million.

Jenny Johnson, CEO of Franklin Templeton, said: “…With outstanding investment performance, Putnam will add complementary capabilities to our existing specialist investment managers to meet the varied needs of our clients and will increase Franklin Templeton’s defined contribution AUM.”

The transaction, scheduled for closing in the fourth quarter, is expected to add to earnings by the end of the first year after the conclusion of the deal.

Out of $925 million, Franklin Templeton will make an up-front payment of around $825 million in stock, and $100 million in cash 180 days after closing of the acquisition.

Franklin Resources will issue 33.3 million of its shares to Great-West, 26.2 million of these shares, representing 4.9 percent of Franklin Resources’ stock. These are subject to a 5-year lock-in period, and the remaining shares are subject to a 180-day lock-in.

With this, Great-West will become a long-term strategic shareholder in Franklin Resources, with an approximate 6.2 percent stake.

In addition, Franklin Templeton will pay up to $375 million in contingent consideration tied to revenue growth targets from the partnership.

Great-West will provide an initial long-term asset allocation of $25 billion to Franklin Templeton’s specialist investment managers within a year of closing with that amount expected to increase over the next several years.

Founded in 1937, Putnam is an asset management firm with $136 billion in assets under management as of April. Putnam has offices in Boston, London, Munich, Tokyo, Singapore and Sydney.

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