Australia’s Macquarie Group to buy Waddell & Reed Financial for $1.7 billion

(Reuters) – Australia’s Macquarie Group said on Thursday it had agreed to buy U.S.-based investment management firm Waddell & Reed Financial Inc for $1.7 billion in cash, expanding the retail footprint of its largest unit in that market.

The deal is the first large acquisition by new Macquarie Chief Executive Officer Shemara Wikramanayake, who previously led the asset management unit that made the deal.

Shares of Waddell & Reed soared 47% in extended trading. The offer price of $25 per share represents a premium of 48% to Waddell & Reed’s last closing price, the companies said.

Shares in Macquarie, which in recent years has transitioned from a pure investment banking firm to a conglomerate operating Australia’s largest investment manager and one of the worlds’ largest infrastructure investors, were 0.3% lower following the announcement.

The deal is expected to close in the middle of 2021, and would add Waddell’s $68 billion of assets under management to its stable, cementing Macquarie’s position as a top-25 actively managed mutual fund manager in the United States, it said.

After the deal closes, Macquarie will sell Waddell & Reed’s wealth management platform to U.S. investment advisory firm LPL Financial Holdings Inc for $300 million, and enter in to a partnership with the retail-focused firm.

Waddell’s investment products “will provide diversification to Macquarie Asset Management’s capabilities and client base,” Martin Stanley, Head of Macquarie Asset Management said in a statement.