Invesco Closes OppenheimerFunds Buyout, Assets Rise To $1.2T
Zacks Investment Research | May 28, 2019 08:38AM ET
Invesco (NYSE:IVZ) has completed the acquisition of MassMutual’s asset management unit, OppenheimerFunds, Inc. The deal, announced in October 2018, significantly boosted the company’s assets under management (AUM), bringing total AUM to around $1.2 trillion.
Following the completion, Invesco has become one of the leading global investment managers. This will likely further strengthen the company’s “ability to help meet client needs through its comprehensive range of high-conviction active, passive and alternative capabilities.”
Martin L. Flanagan, president and CEO of Invesco, said, “We will leverage the combined firm's highly talented team of professionals, expanded set of capabilities and deep global presence to continue providing tailored solutions that help our clients around the world achieve their investment objectives.”
Deal Benefits & Other Details
The deal is expected to be accretive to Invesco’s adjusted earnings immediately. It is projected to be roughly 24 cents per share accretive in 2019, and 58 cents per share accretive in 2020. Also, Invesco and MassMutual will likely continue to explore future strategic tie ups.
Per the terms, the agreement consideration comprises roughly 81.9 million Invesco shares (including approximately 6 million shares issued as part of the conversion of unvested restricted stock awards held by OppenheimerFunds employee shareholders into Invesco restricted stock awards) and nearly $4 billion worth of 5.9% fixed rate perpetual, non-cumulative preferred shares with a 21-year non-call period.
As a result of such a deal arrangement, now MassMutual is a significant stakeholder in Invesco, with nearly 15.7% holdings in the common stock.
Further, Invesco and MassMutual entered into a shareholder agreement, which gave MassMutual customary minority shareholder rights, including representation on Invesco's board of directors. MassMutual has nominated William F. Glavin, Jr., the retired CEO of MassMutual, to Invesco’s board.
Conclusion
Invesco’s acquisition of OppenheimerFunds will go a long way in supporting the company’s financials and will also expand its global reach. The company’s shares have rallied 22% so far this year, outperforming the Zacks Investment Research
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