Mackenzie Finds a Buyer for Ivy
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Thursday, August 29, 2002

Mackenzie Finds a Buyer for Ivy

Waddell & Reed has cut a deal with Mackenzie Financial to buy Mackenzie Investment Management for some $74 million. The deal will also enable W&R to subadvise and market the funds offered by the fourth largest Canadian fund firm.

The transaction includes a $30 million cash payment to Mackenzie Financial and a minimum payment of $10.8 million for a 14 percent equity stake in the unit owned by outside shareholders. Waddell & Reed will also give back $33.2 million of excess working capital held in Mackenzie Investment.

The two firms expect the deal to close before the end of the year.

For its money, Waddell & Reed gains ownership of the Florida-based Mackenzie Investment unit. That unit advises the $756 million Ivy Funds, which are distributed in the United States. It also manages $1.3 billion of subadvisory assets.

Mackenzie Financial also offers a separate line of Ivy mutual funds in Canada that has $31.3 billion Canadian in assets. Those funds will remain with Mackenzie Financial, but they will hire Waddell & Reed's Toronto-based Canadian arm as their subadvisor as a part of the transaction. The Overland, Kansas-based broker-dealer will also take over marketing duties for the Mackenzie Ivy funds in Canada.

"These transactions bring multiple benefits to Waddell & Reed, including substantial subadvisory assets and future subadvisory opportunities in Canada; broad U.S. retail distribution that will enhance our U.S. nonproprietary sales efforts; and investment management resources that will enrich our already deep team," said Keith A. Tucker, chairman and CEO of Waddell & Reed Financial.

Waddell & Reed will keep the Ivy Funds brand for use in its U.S. retail non-proprietary channels. The broker-dealer firm just started distributing its own funds through third-party broker-dealers in recent years on a no-load and load-waived basis. The Ivy Funds will be the first load offerings it sells through these channels.

It also will use the newly acquired Ivy wholesaling team to push its Waddell & Reed Advisor and W&R funds to financial advisors outside of its proprietary system.

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