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Retirement Planning > Retirement Investing

Deal To Make Morningstar A Bigger Money Manager

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The best-known mutual fund rating firm is expanding its investment management operations.[@@]

The firm, Morningstar Inc., Chicago, says it has agreed to acquire Ibbotson Associates Inc., Chicago, an investment strategy firm, for $83 million in cash, “subject to adjustments for working capital and certain make-whole payments.”

Morningstar hopes to close on the Ibbotson deal by March 31, 2006.

“This acquisition is a logical move that will further strengthen Morningstar’s institutional and advisor businesses,” says Morningstar Chairman Joseph Mansueto.

Completing the Ibbotson deal would make Morningstar one of the largest independent providers of managed retirement accounts in the industry, Morningstar says.

Morningstar, which went public in May, is on track to generate about $200 million in revenue this year but has only $226 million in managed retirement account assets and $1.3 billion in managed portfolios.

Ibbotson generates only about $37 million in revenue per year, but it manages $3.5 billion in managed retirement account assets.

Roger Ibbotson, a finance professor, founded Ibbotson Associates in 1977. Today, his firm has 150 employees and is famous for efforts to help investors develop a long-term, asset-allocation approach to investing.

Financial services companies that have recently started using Ibbotson Associates to help customers allocate customers’ assets include units of American International Group Inc., New York; MetLife Inc., New York; Nationwide Financial Services Inc., Columbus, Ohio; and Principal Financial Group Inc., Des Moines, Iowa.

Roger Ibbotson and Michael Henkel, president of Ibbotson Associates, plan to stay with Morningstar after the acquisition is completed, Morningstar says.


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