Macquarie Asset Management to acquire Waddell & Reed Financial for $1.7bn

Macquarie Asset Management has signed a deal worth around $1.7 billion to acquire US-based asset and wealth management company Waddell & Reed Financial.

The asset management unit of Australia-based Macquarie Group is offering to acquire each of the shares of Waddell & Reed Financial for $25.

While the asset management business of the US company has about $68 billion in assets under management (AUM), its wealth management business, which operates as Waddell & Reed Financial Services, has nearly $63 billion in assets under administration (AUA).

Waddell & Reed Financial has been catering to its clients across the US with its investment management and wealth management services for more than eight decades.

The company’s investment products are distributed under the IVY INVESTMENTS brand, and also via independent financial advisors associated with the company.

Following the acquisition, Macquarie Asset Management is estimated to increase its assets under management to over $465 billion.

On the basis of assets under management, the enlarged Macquarie Asset Management will position itself among the top 25 actively managed, long-term, open-ended US mutual fund manager.

In a follow-up to the deal, Macquarie Group has signed an agreement to divest Waddell & Reed Financial Services to LPL Financial Holdings for $300 million along with excess net assets.

Macquarie Group and LPL Financial Holdings will also forge a long-term partnership under which the former will becoming a top-tier strategic asset management partner to the latter.

Martin Stanley – Head of Macquarie Asset Management said: “The addition of Waddell & Reed and our enhanced partnership with LPL will significantly increase our ability to grow and invest in our combined business for the benefit of our clients. IVY INVESTMENTS’ complementary investment capabilities will provide diversification to Macquarie Asset Management’s capabilities and client base.

“The consideration offered reflects the quality of Waddell & Reed’s business and the future benefits of our partnership with LPL.”

The transaction is likely to be wrapped up by mid-2021 should it get the approval of Waddell & Reed Financial shareholders, secure regulatory approvals, and satisfy other customary closing conditions.

Philip J. Sanders – CEO of Waddell & Reed Financial said: “Over the past few years, we have been focused on leveraging our strong heritage as the foundation for transforming our firm into a more diversified and growth-oriented financial services enterprise.

“The long-term partnership between Macquarie and LPL as part of this transaction accelerates that transformation and ultimately will benefit our clients and independent Financial Advisors while delivering significant value to our stockholders.”