Ameriprise Financial announced Monday it had agreed to acquire the Bank of Montreal’s (BMO) asset management business focusing on Europe, the Middle East and Africa (EMEA) for $845 million.
The transaction, which helps BMO with its stated strategy of offloading noncore assets, adds some $124 billion in assets, mostly in Europe, to Ameriprise.
The EMEA asset management firm will operate as a supplement to Boston-based Columbia Threadneedle Investments, an Ameriprise subsidiary that currently holds $547 billion in assets and 450 investment professionals across 17 countries. Post transaction, the assets in the investment management business will increase to $671 billion. Ameriprise has more than $900 billion in AUM and assets under administration, according to the company’s website.
The transaction is expected to close in the fourth quarter of this year and accrete in 2023.
In a statement, Jim Cracchiolo, chairman and CEO of Ameriprise, said, “This strategic acquisition represents an important next step as we expand our solutions capabilities, broaden our client offering and deepen our talented team.”
With Columbia Threadneedle, Ameriprise has a large European presence with a few locations in Asia. BMO clients in the U.S. and Canada will have access to more European investment products and the ability to move to Columbia Threadneedle.
The EMEA unit was bought at a discount—it’s not “dirt cheap, but it’s not overly rich,” said Cathy Seifert, vice president at CFRA Research.
Ameriprise bought the unit at 0.7% of purchase price to AUM. That’s less than the average of its total transactions over the past 12 months, said Seifert, which equals 2.4% of purchase price to AUM. She suspects that Ameriprise will end up cost cutting to bring the profitability of the unit in line with the industry average.
Seifert, who has a Buy rating on the stock, also added that the transaction was more about boosting Ameriprise’s AUM than offering a wider selection of international products as “assets in EMEA are not exactly hot properties these days.”
Analysts are split on whether Ameriprise will acquire more asset management firms. Seifert said Ameriprise would likely and another strategic acquisition like this would up its stock value.
John Barnidge, an analyst with research firm Piper Sandler, said he thinks Ameriprise is likely done with asset management consolidation.
“They’ve been pushed on calls about their M&A interests, and this closes the door on that,” Barnidge said. “Good thing because there’s less execution risk.”