J & W Seligman & Co. Sold for $440 Million

by StockJockey

Wednesday, July 09, 2008 - 2:41 am

J & W Seligman & Co is independent no more, they have sold themselves to Ameriprise Financial in a deal that values the firm at roughly 2.5% of assets under management:

Ameriprise Financial, Inc. (NYSE: AMP) today announced a definitive agreement to acquire the venerable asset management firm J. & W. Seligman & Co. Incorporated for a total consideration of $440 million. The transaction, which is likely to close in the fourth quarter of 2008, is expected to be accretive to Ameriprise Financial earnings and return on equity in 2009.

New York-based Seligman manages approximately $18 billion in assets in open- and closed-end funds, hedge funds and institutional accounts. Founded in 1864, Seligman is a privately-held company that manages the nation’s first growth mutual fund and helped pioneer single-state municipal funds. Seligman is recognized in particular for its accomplished technology investment team, which manages several retail and alternative portfolios, including Seligman Communications and Information Fund.

The acquisition provides multiple benefits for Ameriprise Financial:

* The addition of Seligman’s approximately $3 billion in hedge fund assets substantially increases the company’s alternative investment activities;
* Seligman’s proven investment management capabilities add breadth and depth to the RiverSource multi-investment boutique strategy. The transaction adds Seligman’s world-class technology investment team, led by Paul Wick, and its accomplished growth team, while its value team complements strong RiverSource value offerings;
* The transaction accelerates the company’s third-party distribution reach and scale, and substantially increases its existing wholesaling force. Home Page

The timing of the sale is a bit curious; they have had years to do this, and waited until valuations of asset management shops absolutely tanked. A well-timed deal, say two years ago, could have brought in another $100 million or so, but it is a lot of money to pay for Paul Wick, who runs roughly 20% of the shops assets. Of course, they never had a viable small or mid-cap strategy worth a damn either, which is a big hole in the shops lineup.

Wick has pulled a lot of money out of that shop, and I am sure he will be busting his ass waiting for the earn out, assuming there is one, to expire.

We should know soon if the deal was consummated on the day the financial stocks bottomed in the great bear market of 2008.

But given it is an accretive deal for Ameriprise, I am sure they are happy to do it right here, and now.

Ameriprise Financial To Acquire J. & W. Seligman & Co.
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