Marty Flanagan Makes His Biggest Buy Yet
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Thursday, October 18, 2018

Marty Flanagan Makes His Biggest Buy Yet

Marty Flanagan and his team are about to make their biggest purchase ever, pushing Invesco to more than $1.2 trillion in AUM thanks to a $5.7-billion deal.

This morning Flanagan, president and CEO of Invesco, confirmed that, as expected, the Atlanta-based, publicly traded asset manager has entered a definitive agreement to buy New York City-based OppenheimerFunds [profile] from Springfield, Massachusetts-based Massachusetts Mutual Life Insurance Company (MassMutual). MassMutual itself and OpFunds' employee shareholders will receive 81.9 million common shares of Invesco stock (at yesterday's closing price of $20.94, that translates to $1.715 billion) and "$4 billion in perpetual, non-cumulative preferred shares with a 21-year non-call period and a fixed rate of 5.9%."

As a result, MassMutual will become Invesco's biggest shareholder, holding about 15.5 percent of its common equity. As such, MassMutual has chosen retired OpFunds CEO Bill Glavin to take a seat on the Invesco board.

OpFunds had more than $246 billion in AUM as of September 30, so the combined $5.715-billion price tag translates into 2.32 percent of OpFunds' AUM. Put another way, the price tag is more than 38 times what MassMutual paid ($150 million) to acquire OpFunds in 1990, when the fund firm had just $14 billion in AUM.

Deal talk has been swirling around OpFunds since the summer. The deal is expected to close in Q2 2019. By Invesco's estimation, after the deal closes it will be the 13th largest asset manager in the world and the sixth largest U.S. retail asset manager.

Andrea Partners and BofA Merrill Lynch advised Invesco on the deal, while Lazard advised MassMutual. Wachtell, Lipton, Rosen & Katz provided legal counsel to Invesco, while Simpson Thacher & Bartlett provided legal counsel to MassMutual.

"This is a compelling, highly strategic and accretive transaciton for Invesco that will help us achieve a number of objectives: enhance our leadership in the U.S. and global markets, deliver the outcomes clients seek, broaden our relevance among top clients, deliver strong financial results and continue attracting the best talent in the industry," Flanagan states. "OppenheimerFunds' culture and commitment to high-conviction investing complement our own."

OpFunds has more than 2,000 employees, with main offices in Dallas, Denver, New York, Rochester, and Seattle. Invesco has more than 7,000 employees (including about 250 in New York.)

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