The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:And Then There Were Two Not Rated 4.0 Email Routing List Email & Route  Print Print
Tuesday, December 13, 2005

And Then There Were Two

by: Armie Margaret Lee

First there was 401(k) Forum (later mPower), then Financial Engines and Rational Investors joined the online advice game. Later, Ibbotson Associates -- an already well-established firm -- quietly signed on. Lastly, Morningstar jumped in with the biggest splash in late 1999.

Then Standard & Poor's purchased Rational Investors, only to sell that business to mPower, which later sold to Morningtar.

Now Morningstar is buying one of its two remaining rivals.

The Chicago-based firm said Monday that it will buy Ibbotson Associates for $83 million in cash, in a deal that would make the Chicago-based investment research firm one of the largest independent providers of managed retirement accounts. The transaction is expected to close in the first quarter of 2006.

The deal makes sense by stock market logic. Ibbotson had $37.2 million in revenue for its fiscal year ended June 30, 2005. That means that Joe Mansueto & Co. are paying just 2.2 times sales for Ibbotson. Yet, their own shares trade at roughly 6.4 times trailing sales.

So, the folks at Morningstar use part of their IPO hoard to put one of their two rivals out of the game and they are able to goose revenues for the stock market.

Morningstar officials also said they expect to realize approximately $10 million in cash tax benefits in connection with payment for the cancellation of Ibbotson’s stock options.

Calling the acquisition a "logical move," Morningstar chairman and CEO Joe Mansueto said the deal would further boost Morningstar’s institutional and advisor businesses.

"Ibbotson’s expertise in asset allocation and Morningstar’s expertise in security selection and investment research is a powerful combination," he said.

Ibbotson oversees $3.5 billion in assets for participants in 401(k) and other defined contribution plans and manages assets on behalf of several major retirement plan providers. Meanwhile, around 12 million retirement plan participants have access to Morningstar’s stable of retirement planning services through about 69,000 plan sponsors and 30 plan providers.

Morningstar plans to offer Ibbotson’s asset allocation software and services through its existing global platform, according to the news release.

Professor Roger Ibbotson, Ibbotson’s founder, and Mike Henkel, president, plan to stay on with the merged company. It was not known, however, which titles they will assume.

"Ibbotson is a good fit with Morningstar’s culture," said Ibbotson, who founded the company in 1977, in a statement. "Our missions are very similar; we are both focused on solving investor problems. Joe and I both started our companies as boot-strap ventures, and we run our businesses with an entrepreneurial spirit. We have worked with each other for many years and I can’t think of a better partner for our business."

Ibbotson employs about 150 people in offices in Chicago, New York and Tokyo. The fate of its employees has yet to be determined, said Morningstar spokeswoman Julie Crothers.

"A transition team has been put in place with members from both Morningstar and Ibbotson and they’ll be looking at these issues," she said. 

Stay ahead of the news ... Sign up for our email alerts now

 Do You Recommend This Story?

Return to Top
 News Archives
2023: Q4Q3Q2Q1
2022: Q4Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Add to My Yahoo!
follow us in feedly

  1. WE Pacific NW - Year-End Holiday Social and Chapter Leadership Drive, December 5
  2. WE South - A Deep Dive Into the Offshore Ecosystem, December 6
  3. MFDF webinar - Unique Oversight Considerations For ETFs, December 6
  4. Stradley Ronon's Financial Services Regulatory Workshop, December 6
  5. MMI webinar - From an Idea to a Movement: Choosing Self-Confidence + Finding Our Strengths, December 7
  6. SEC Investor Advisory Committee Meeting, December 7
  7. MMI webinar - Make Your Money Work For You, December 12
  8. MFDF In Focus: Impacts of SCOTUS Affirmative Action Decision on Fund Boards and Industry Diversity Efforts, December 12
  9. P&I Best Places to Work In Money Management - The Future of Asset Management, December 12
  10. MFDF webinar - Investment Valuation and Governance: Deloitte's 21st Annual Fair Valuation Pricing Survey, December 13
  11. MFDF Director Discussion Series - Open Forum via Zoom, December 14
  12. MFDF 2024 Directors' Institute, January 22 - 24, 2024
  13. 2024 ICI Innovate, February 6 - 8, 2024
  14. The Advyzon Conference, February 20 - 22, 2024
  15. Raymond James 2024 Annual Shareholders Meeting, February 22, 2024
  16. MFDF 2024 Fund Governance & Regulatory Insights Conference, March 7 - 8, 2024
  17. Nicsa 2024 Strategic Leadership Forum, March 13 - 15, 2024
  18. 2024 MMI Summit, March 13 - 14, 2024
  19. Women In ETFs 10-Year Anniversary Celebration, March 14, 2024
  20. Wealth Management Edge 2024, May 13 - 16, 2024
  21. MFDF Conference of Fund Leaders Forum, June 5, 2024
  22. MFDF Director Discussion Series - Open Forum (Philadelphia), June 20, 2024
  23. Morningstar Investment Conference Conference 2024, June 26 - 27, 2024
  24. 2024 MMI Annual Conference, October 15 - 17, 2024

©All rights reserved to InvestmentWires, Inc. 1997-2023
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use