Ameriprise Financial said it will buy the Europe, Middle East and Africa asset-management business of BMO Financial Group for about $845 million in cash, the second-largest deal in recent years by the Minneapolis-based financial-advisory firm.
The acquisition, announced Monday, will add about $124 billion of assets under management in EMEA, as the region is called, to Ameriprise's operations. Ameriprise will have more than $1.2 trillion of assets under management after the deal.
It also creates a strategic relationship with BMO Wealth Management so that its North American clients can access Ameriprise's Columbia Threadneedle investment management solutions. Some asset-management clients at BMO, or Bank of Montreal, also could move to Columbia Threadneedle in the U.S., the company said.
"This strategic acquisition represents an important next step as we expand our solutions capabilities, broaden our client offering and deepen our talented team," said Ameriprise CEO Jim Cracchiolo in a statement. "We are a disciplined acquirer and believe this transaction will build on our track record of successful acquisitions for the benefit of clients and our other stakeholders."
In 2010, the company purchased Columbia Management, a $1 billion move that doubled the size of its mutual fund business and made it one of the nation's largest players in that investment category.
In 2015, Ameriprise rebranded the mutual fund operation as Columbia Threadneedle, bringing the business together with the U.K.-based Threadneedle investment firm it acquired in 2003.
After the BMO deal, about 40% of Columbia Threadneedle's assets under management will be in Europe with the remainder chiefly in the U.S.
Ameriprise said the BMO asset-management unit transaction is expected to be accretive to earnings in 2023 and to generate an internal rate of return of 20%. It will not impact the plan for capital return, the company added.
Most of BMO's EMEA unit is in London, where Columbia Threadneedle has a sizable operation. The BMO unit has large offices in Edinburgh, Amsterdam and in Germany.
For BMO the deal represents a decision to concentrate on the Canadian market and is part of a consolidation sweeping through the asset management industry, which has come under many of the competitive pressures that digital services have brought to financial sectors. Earlier this year, Wells Fargo & Co. agreed to sell its asset management business. In Europe, Societe Generale is in exclusive talks to sell most of asset manager Lyxor to Amundi. And Credit Suisse is exploring options for its asset management business, Reuters reported last week.
The deal is due to close in the last three months of 2021.
Kavita Kumar • 612-673-4113 Twitter: @kavitakumar