Investors show little enthusiasm for Sceptre alliance with Putnam

Sceptre was hotly tipped as a takeover target in the wake of deals for Bissett, Perigee and Global Strategy. Instead it entered a strategic alliance with Putnam to establish co-branded investment products for Canadian institutional clients. Putnam has bought a 5% minority position in Sceptre from current insider shareholders for $13 million, and will take a seat on the board. Putnam will also have the potential to increase its stake over time. Putnam becomes Sceptre’s sub-advisor for its foreign equity pooled funds, effective October 1.

This deal with Putnam obviously wasn’t the climactic event traders were looking for, and they’ve punished the stock as a result. The stock peaked at $22.50 a couple of times earlier this year, and in the run up to its announced deal with Putnam, the stock hit $20.50 on speculation that it would be sold, but it has been sliding a little almost everyday since then. Today the stock sits at $16.50, sliding toward its 52-week low of $14.50.

A declining asset base is the most obvious explanation for the slide. To the end of August the firm had seen its mutual fund assets under management decline to $528.9 million from $675.9 million a year ago. In the first nine months of this year the firm has earned 75¢ a share, down from 83¢ in the period last year.
-IE Staff