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FleetBoston acquisition
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June 5, 2001: 1:28 p.m. ET
Northeast bank buys Liberty asset management business for $900M cash
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NEW YORK (CNNfn) - FleetBoston Financial Corp. agreed to acquire the asset management unit of Liberty Financial Companies Inc. for $900 million cash.
The acquisition, agreed to late Monday, calls for FleetBoston (FBF: up $0.14 to $41.93, Research, Estimates) to assume $110 million in debt. The purchase price represents a $750 million premium to the net worth of Liberty's assumed operations, the company said.
Boston-based Fleet, a regional bank, said the acquisition will add $51 billion in assets under management, bringing total assets to about $173 billion and making the bank the world's 29th-largest investment manager.
The buy of Liberty's asset management business will expand FleetBoston's retail and institutional asset management business, adding 250 distribution professionals.
The asset management unit of Liberty Financial consists of Colonial Management Associates, Crabbe Huson Group, Liberty Asset Management Co., Liberty Funds Distributor, Liberty Funds Services, Newport Pacific Management, Progress Investment Management Co., Stein Roe & Farnham, and Liberty Wanger Asset Management.
"Through this transaction, FleetBoston will now have the elements in place for substantial growth in the asset management business through distribution of a full range of investment products across all channels, managed by some of the best investment talent in the business," FleetBoston Chairman and CEO Terrence Murray said.
News of the sale caused Liberty Financial (L: down $1.10 to $32.70, Research, Estimates) shares to drop nearly 4 percent in afternoon trading Tuesday while FleetBoston gained marginally.
The sale was expected. Boston-based Liberty announced it was interested selling the business last November, and flirted with both Prudential PLC of the U.K. and American General Corp. (AGC: up $0.15 to $44.90, Research, Estimates) before American International Group Inc. won its $23 billion takeover bid for American General in May.
FleetBoston, created by the 1999 merger of Fleet Financial and BankBoston Corp., is the nation's seventh-largest bank. Last October, FleetBoston bought Summit Bancorp for $7 billion in stock, bolstering its ongoing Northeast expansion plans. The purchase made Fleet the No. 1 commercial bank in New Jersey.
The Liberty purchase, which is subject to regulatory approval, is expected to close at the end of the third quarter. 
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