Invesco Scoops Up Van Kampen Assets

Invesco Ltd. has entered into a definitive agreement to acquire Morgan Stanley’s retail asset management business, including Van Kampen Investments. 

Through the transaction Invesco acquires $119 billion in assets under management (AUM) across equity, fixed income, alternatives (including mutual funds and separate accounts) and unit investment trusts.  The transaction is valued at $1.5 billion; $500 million in cash and 44.1 million shares representing $1 billion in Invesco equity that provides Morgan Stanley a 9.4% equity interest in Invesco. 

Furthermore, Invesco’s organization will expand by approximately 650 investment, distribution and operations support professionals globally.  

The transaction, which has been approved by the boards of directors of both companies, is expected to close in mid-2010, subject to customary regulatory, client and fund shareholder approvals. 

A potential deal for the Morgan Stanley business had been rumored in August.  Then, about a week ago, the Wall Street Journal reported that Invesco was rumored to be the front-runner in what was estimated to be a $1-$2 billion bid. 

In announcing the move today, Invesco said that the combination would: 

  • Expand the depth and breadth of their investment strategies
  • Enhance their ability to serve U.S. clients by positioning Invesco among the leading U.S. asset managers by AUM, diversity of investment teams and client profile
  • Strengthening Invesco’s overall distribution capabilities; and
  • Further strengthening the firm’s position in the Japanese investment management market.

“We are excited to expand the depth and breadth of our investment strategies, which will enable us to offer our clients a truly comprehensive range of investment capabilities through an expanded set of investment vehicles,” said Martin L. Flanagan, Invesco president and CEO, in announcing the move. “This combination of talented teams from both organizations will enhance Invesco’s ability to deliver meaningful solutions to our retail and institutional clients around the world, and better position Invesco for long-term success.” 

“This complementary combination fully meets Invesco’s previously stated acquisition criteria, and we believe strongly benefits our clients and shareholders,” said Loren Starr, chief financial officer of Invesco.  “We expect that this transaction will be approximately 11% accretive in the first 12 months after close and have an IRR of approximately 30%.” 

At closing, Invesco will have approximately 700 investment professionals, with what was described as “a meaningful presence in all major markets around the world’.