Deutsche Bank AG, Frankfurt am Main, and Northern Trust Corporation, Chicago, announced today that they have signed a definitive agreement for the sale of Deutsche BankÂ's global passive equity, enhanced equity and passive fixed income businesses.
The parties expect to complete this transaction within three to six months, subject to regulatory approval and other closing conditions. Both firms will work together to ensure a smooth transition. The purchase price is based on the total value of managed assets transferred to Northern Trust. Based on assets under management as of June 30, 2002 of $120 billion, the purchase price would be approximately $260 million, subject to adjustments.
'This divestiture is another step in the implementation of Deutsche BankÂ's strategy to focus on core competencies. After an in-depth strategic review, based on Deutsche Asset ManagementÂ's size and global presence, we have made the decision to concentrate our efforts on active management. This will enable us to provide more focused products and services to our clients,' commented Tom Hughes, Member of the Group Executive Committee and Global Head of Asset Management of Deutsche Bank. 'Our global investment and distribution platforms are among the broadest and deepest in the industry allowing us to deliver significant value added expertise to our clients. With this increased focus on our key strengths, we will continue to build on our position. The passive business being sold represents total assets under management of approximately $120 billion, (as of June 30, 2002) and generates less than 2% of Deutsche Asset ManagementÂ's revenues,' Hughes added.
Commenting on the agreement, William A. Osborn, NorthernÂ's Chairman and CEO, said, 'This acquisition highlights Northern TrustÂ's commitment to the global investment management business. Our assets under management will increase to approximately $447 billion from $327 billion (based on assets under management as of June 30, 2002), placing us among the ten largest investment managers in the U.S. and among the top three U.S. institutional index managers. We estimate that this transaction will be very slightly dilutive to earnings in the first year and very slightly accretive to our earnings thereafter.'
Stephen B. Timbers, president of Northern Trust Global Investments, stated, 'This acquisition is an excellent strategic fit for Northern Trust. The complementary nature of the asset base fits nicely on our existing quantitative management platform, while the additional product capability allows us to expand our international and enhanced index offerings significantly. The enhanced product line also provides a natural bridge between our index capabilities and our highly competitive line of active equity and fixed income products. This acquisition also supports our related businesses, including our rapidly growing transition business which will benefit from increased trading volume, and our securities lending activities, where we already hold an established leadership position.'
(source: Deutsche Bank)