(August 30 ) – AGF Management Limited is buying rival Global Strategy Holdings Inc. for $438 million in cash and stock. The deal will create a fund company with about $35 billion in assets under management, although only about $29 billion in mutual fund assets according to IFIC statistics.
AGF will now surpass rivals C.I. Fund Management Inc. and CIBC. But it will continue to trail Investors Group, AIM Fund Management Inc., Royal Mutual Funds, Fidelity Investments Canada and TD Asset Management. AGF lost out on a proposed deal for Trimark Financial Corp. earlier this year. That deal would have been a blockbuster. It put AIM, the eventual buyer, it into the top spot.
AGF estimates that it will reduced fund operating costs. As part of the transaction, Rothschild Asset Management will continue to act as an exclusive sub-advisor on international funds.
AGF is one of few firms currently enjoying strong sales momentum, but it is picking up a firm that’s lagging. “This acquisition is a home-grown Canadian solution that reinforces AGF’s strategic position as a global company with a Canadian home,” said AGF CEO Blake Goldring. “It represents a tremendous opportunity for AGF to offer our investors an even broader range of investment products, to enhance our distribution channels, strengthen operational capacity, and benefit from economies of scale.”
The transaction will be paid 67% to 75% in cash with the rest in AGF.B shares. The deal also carries an asset adjustment payment to a maximum of $13 million based on assets under management at closing. Closing is anticipated by October 31, subject to regulatory approval.
-IE Staff