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Ameriprise (AMP) Acquires BMO's EMEA Asset Management Business

Ameriprise Financial, Inc. AMP has completed the previously-announced deal with Canada-based BMO Financial Group to take over its EMEA asset management operations. The all-cash transaction, valued at £615 million ($829 million), was announced this April.

The move is expected to further strengthen Ameriprise’s wealth and asset management businesses.

Ameriprise expects the acquisition to add additional value through the inclusion of certain capabilities like “Responsible Investment, Liability Driven Investing, Fiduciary/outsourced Management and European Real Estate,” which can be leveraged globally. Further, BMO Financial's publicly-traded investment trusts will act as tailwinds for Columbia Threadneedle Investments’ (Ameriprise’s global asset management arm) closed-end fund.

Also, the acquisition will complement Columbia Threadneedle’s core business and global growth strategy. Apart from this, it will solidify Ameriprise’s position in the European institutional market, with an expansion in investment capabilities and solutions to broaden client offerings.

Jim Cracchiolo, the chairman and CEO of Ameriprise, stated, “We’re pleased to complete this strategic acquisition that significantly extends our reach in EMEA and adds important capabilities to Columbia Threadneedle. The BMO GAM EMEA business is performing well with positive flows, which complements the organic growth we’ve been driving. And importantly, clients and institutional consultants have responded favorably. We welcome the team to Ameriprise and Columbia Threadneedle and look forward to what we are able to accomplish together.”

Now, Ameriprise will have more than $1.3 trillion of assets under management and administration. Also, with the addition of BMO’s EMEA asset management business, Columbia Threadneedle’s AUM will increase to more than $714 billion.

The strategic alliance will give BMO Wealth Management’s North American Wealth Management clients’ accessibility to a range of Columbia Threadneedle investment management solutions. In the United States, it will offer the opportunity for certain BMO asset management clients to move to Columbia Threadneedle, subject to client consent.

At the time of the deal announcement, Ameriprise projected the acquisition to be accretive in 2023, with an internal rate of return of 20%.

Our Take

Ameriprise has been engaged in a number of strategic acquisitions, which reflect its solid balance sheet and liquidity positions. It has also restructured its business from time to time through divestitures and spin-offs, with an aim to remain profitable by focusing on its core operations. The expansion initiatives are expected to continue boosting profitability and market share as well as help the company diversify its revenues.

Over the past six months, shares of Ameriprise have rallied 16.2%, outperforming the industry’s growth of 2.1%.

 

Image Source: Zacks Investment Research

 

Currently, Ameriprise carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Competitive Landscape

Several companies from the finance sector are undertaking consolidation efforts to counter the low interest rate environment along with the heightened costs of investments in technology. Also, mergers help in diversifying revenues and products.

Recently, in a bid to expand its presence, OceanFirst Financial Corp. OCFC entered an agreement with Partners Bancorp, which will merge into the former. Closing of the deal is expected in the first half of 2022, subject to the receipt of required regulatory approvals, the receipt of approval from Partners Bancorp shareholders and the fulfillment of other customary closing conditions.

Last month, with an aim to further diversify deposit gathering capabilities and revenue mix, Raymond James RJF announced a cash-cum-stock deal to acquire TriState Capital Holdings, Inc. TSC for roughly $1.1 billion.


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Ameriprise Financial, Inc. (AMP): Free Stock Analysis Report
 
Raymond James Financial, Inc. (RJF): Free Stock Analysis Report
 
OceanFirst Financial Corp. (OCFC): Free Stock Analysis Report
 
TriState Capital Holdings, Inc. (TSC): Free Stock Analysis Report
 
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