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Franklin snags Fiduciary
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October 25, 2000: 12:45 p.m. ET
Franklin Templeton parent buys trust investment firm for $825 million
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NEW YORK (CNNfn) - The operator of the Franklin Templeton Group of Funds agreed Wednesday to buy Fiduciary Trust Company International for about $825 million in stock, creating a combined company with more than $280 billion in assets.
The merger immediately strengthens Franklin's ability to service institutional clients and high-net worth clients, two profitable areas where the New York-based Fiduciary excels. The transaction also bolsters Franklin's international reach, as Fiduciary manages assets for corporations, public funds and endowments in Europe, Asia, Australia and the Middle East.
The agreement values each Fiduciary (FCNY: Research, Estimates) share at $113.38, representing a 74 percent premium over Fiduciary's Tuesday close, but is subject to a collar.
If the average price of Franklin (BEN: Research, Estimates) shares fall below $34.86, Fiduciary shareholders will receive a number of shares based on an exchange ratio of 3.2697. If the average price is above $42.38, Fiduciary investors get shares at a ratio of 2.6752.
 Shares of Franklin fell 75 cents to $39.65 on the New York Stock Exchange in mid-day trading, while Fiduciary shares soared, rising $39 to $104.
Fiduciary's top management agreed to enter into long-term employment contracts to "ensure continuity" at the company.
Fiduciary Trust manages about $50 billion in assets, specializing in investment services for trusts, endowments and foundations.
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"We plan to offer Fiduciary's global growth products to the retail channel, as
well as explore how we can provide Fiduciary's value added services, such as estate and trust planning, to our investment advisor clients," said Charles B. Johnson, chairman and CEO of Franklin Resources, in a statement.
Franklin has about 230 funds that invest in stocks across the globe.
The company also announced Wednesday its fourth-quarter net income rose to $140.8 million, or 58 cents per diluted share, compared to $132.4 million, or 52 cents a share, for the same period a year ago. The results matched Wall Street expectations as compiled by First Call Corp.
The companies expect to complete the deal by the first quarter of 2001. The companies said there is a breakup fee, but did not disclose the amount.
Goldman Sachs advised Fiduciary Trust on the deal, while Merrill Lynch served as adviser to Franklin. 
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