Hellman & Friedman has signed a deal with robo adviser Financial Engines to purchase the independent investment adviser for $45.00 per share in cash, for a total value of $3.02 billion.
The price per share is more than a 32% premium above the closing share price of $33.95 on April 27 and more than a 41% premium above the trailing 90-day volume weight average stock price for the period ended on April 27. Hellman & Friedman, which owns Edelman Financial Services, will combine the two companies.
Financial Engines has $169 billion in assets under management. The company serves retirement plans at more than 750 companies. Edelman manages more than $21.7 billion for more than 35,000 clients.
“After a thorough assessment, the board has determined that this transaction represents a compelling outcome for our stockholders, customers and employees,” said Blake Grossman, chairman of the board of Financial Engines. “It recognizes the value of Financial Engines’ franchise and mission while providing stockholders with a substantial premium.”
Allen Thorpe, a partner at Hellman & Friedman, added, “We look forward to further investing in Financial Engines to accelerate its growth and success.”
Ric Edeman, chairman of Edelman, said, “We are very excited to join forces with Financial Engines to serve more clients better than ever and to accelerate growth in the business.”
The transaction is expected to close in the third quarter, subject to approval by Financial Engines’ stockholders, regulatory approval and other customary closing conditions.
In 2015, Financial Engines purchased The Mutual Fund Store for $560 million in order to offer its clients more holistic advice. At the time, Financial Engines President and CEO Lawrence (Larry) Raffone said that robo and in-person advice are not mutually exclusive and that research his firm conducted indicates that even those interested in robo-advice value the human touch. In line with this, the following year, Financial Engines hired additional advisers around the country. Citing reserach from Aon Hewitt, the company noted that 54% of employees would like access to financial advice through the workplace. Additionally, Aon Hewitt’s 2016 Hot Topics in Retirement and Financial Well-Being report indicated that 89% of employers are likely to add or expand the financial well-being tools and services offered to employees this year.
In March, The United States District Court for the Northern District of Illinois, Eastern Division, ruled for the defendants in an Employee Retirement Income Security Act (ERISA) lawsuit filed by participants in the Caterpillar 401(k) plan against Aon Hewitt. Financial Engines was named in the text of the suit but was not formally charged as a defendant.