AllianceBernstein (AB) To Buy U.K.-Based Autonomous Research
Zacks Investment Research | Nov 20, 2018 08:08PM ET
AllianceBernstein Holding L.P. (NYSE:AB) recently announced that it has inked an agreement to acquire all partnership interests and shares of U.K.-based global financial service provider, Autonomous Research. While neither of the companies disclosed the details of deal, per the market rumors, it is valued at nearly $110 million.
Seth Bernstein, AllianceBernstein's President and CEO said, “The combination of Autonomous and Bernstein positions AB to be the preeminent provider of the industry's highest quality independent research to our clients worldwide. Research is the foundation of our business, and investing judiciously in these capabilities will enhance AB's reputation and value proposition to all our clients."
Transaction Details and Benefits
The deal, still subject to regulatory approvals, is expected to close over the next few months. AllianceBernstein projects the acquisition to be marginally accretive to earnings by 2020, in lieu of modest up-front investment. It also is anticipated to further strengthen the company’s scale and global reach with offices across Europe, Asia and the United States.
Following the closure of the deal, each entity will likely be retaining their respective business model and even brand identity, initially. Erick Davis, CEO of Autonomous Research said, “The combination with AB will allow us to offer a complementary range of research and trading capabilities to a wider global audience.”
Conclusion
The announcement comes at a time when asset management industry is facing regulatory upheaval following the introduction of Markets in Financial Instruments Directive or Mifid II in Europe. This requires investors to pay separately for the research and trade executions, instead of having that covered by the margins paid for the trades.
Notably, most of the research houses have decided to pay from the research from their own pockets rather than passing the costs to investors. Therefore, asset management industry is likely to witness further consolidation going forward.
The acquisition is expected further strengthen AllianceBernstein’s revenue base and improve profitability.
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