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Monday, June 20, 2016

Will Franklin or T. Rowe Buy This ETF Shop? An Analyst Wonders

News summary by MFWire's editors

A publicly-traded ETF specialist could be a prime acquisition target for Franklin Templeton [profile] or T. Rowe Price [profile]. So argues one asset management-watching analyst.

Barron's and StreetInsider.com both highlight a new note from Jefferies analyst Surinder Thind, who writes that New York City-based WisdomTree [profile] (ticker WETF) "would be more valuable" to San Mateo, California-based Franklin or Baltimore, Maryland-based T. Rowe, at least when it comes to potential acquirers in the U.S.

Thind writes that "continued negative growth simply increases the likelihood of the company [WisdomTree] becoming an acquisition target" and that "everyone" is interested.

"It's simply a matter of price," Thind writes. "We are not suggesting the buy-out of WETF is imminent or there are talks but the possibilities are intriguing."

Thind argues that "putting WETF products through [Franklin's] distribution network could produce strong synergies". And T. Rowe, Thind notes, "is in the early stages of developing an ETF strategy," so "acquiring WETF would solve that problem and potentially provide a compelling active + passive offering for the advisor community."

Thind's commentary comes a week after Franklin CEO Greg Johnson predicted more mid-sized asset manager mergers. And earlier this month Franklin launched its own line of strategic beta ETFs, LibertyShares; Johnson told Barron's he "looked at various acquisitions" before deciding choosing the "organic path to build a brand."

Meanwhile, WisdomTree's shares have taken some hits recently. On Friday its shares closed at $10.72 each, down about 32 percent year-to-date and 52 percent year-over-year. Thind rates WisdomTree's stock a buy, and his price target is $13 per share (a 21-percent bump over Friday's price). 

Edited by: Neil Anderson, Managing Editor

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