The transaction, expected to close in the spring, cost approximately $1 billion, based on net asset flows and investor consents in the period leading up to the closing. Columbia had approximately $165 billion in equity and fixed-income assets under management as of June 30.
Ameriprise announced that the combined U.S. asset management business will be led by Ted Truscott, currently president, U.S. asset management, annuities, and chief investment officer at Ameriprise. Michael Jones, currently president of Columbia Management, will serve as president, U.S. asset management. Colin Moore, chief investment officer at Columbia Management, will continue in his role for the combined organization.
Ameriprise said the combination will create an asset management business with nearly $400 billion in global assets under management, and the eight-largest manager of long-term mutual funds in the U.S. The deal includes a five-year strategic distribution providing ongoing access to clients of BofA’s affiliated distributors, including U.S. Trust.
“This acquisition transforms our asset management business, a core component of our integrated business model, and will significantly accelerate our growth,” said Jim Cracchiolo, chairman and CEO of Ameriprise Financial. “The combined business, which will bring together an extraordinary depth of investment talent, will provide the scale and the investment performance record for us to serve a broad range of investors—retail, high-net-worth, and institutional.”
The unit will be based primarily in Boston and operate under the Columbia Management brand. Ameriprise also plans to retain the brands of the Columbia Wanger and the Acorn family of funds and to keep the RiverSource brand as the primary mark for the company’s insurance and annuities entities and certain institutional and mutual funds. Furthermore, Marsico Capital Management will continue to serve as a sub-advisor for certain Columbia Management funds.
In the last few years, Ameriprise has expanded its asset management business by acquiring the asset managers Threadneedle and J.&W. Seligman & Co. Incorporated, among others (see “Threadneedle Name Comes to U.S.” and “Ameriprise to Acquire J.&W. Seligman”).
“I am also confident that we will integrate Columbia Management with Ameriprise Financial efficiently and effectively,” Cracchiolo continued. “Our demonstrated strength in executing complex transactions—through our spinoff in 2005, our acquisition of Threadneedle and our 2008 acquisitions—has given us the expertise and experience necessary to make this transaction successful.”
It has been expected that BofA would sell off Columbia, which the bank acquired five years ago. Some saw Columbia as redundant after BofA acquired Merrill Lynch and gained a 50% ownership in BlackRock, which as $1.4 trillion in assets under management (see “Report: BofA Might Put Columbia on the Block”).
Now that the bank has a buyer for the long-term business of Columbia, BofA said it is still considering what to do with the cash investments, or short-term asset management business.
"The acquisition of Merrill Lynch provided an opportunity to look at our entire portfolio of businesses with an eye toward strengthening our capital position while ensuring that we continue to offer the broadest possible solutions to our customers and clients," said Joe Price, chief financial officer of Bank of America. "We're pleased to reach an agreement with Ameriprise that is consistent with that goal."