Great-West Lifeco Inc. has agreed that it and an affiliate will pay a total of $3.9 billion for Putnam Investments and Putnam’s 25% stake in T.H. Lee Partners L.P., a private equity firm.
Great-West Lifeco, Winnipeg, Manitoba, is a large financial services holding company that, up until now, has been most visible in the United States as the parent of Great-West Life & Annuity Insurance Company, Greenwood Village, Colo., a company that sells group health coverage, retirement plans and employee benefits products.
Putnam, Boston, a unit of Marsh & McLennan Companies Inc., is a mutual fund company with satellite offices in London and Tokyo, 3,000 employees, and $192 billion in assets under management. About $35 billion of the assets are in the accounts of European and Japanese clients.
Great-West Lifeco and Marsh hope to complete the deal by June 30.
Marsh put Putnam on the blocks months ago, after regulatory investigations in connection with matters such as mutual fund market-timing hurt Putnam’s ability to hold on to fund assets.
Great-West Lifeco decided to acquire Putnam because “this transaction positions Lifeco as a leader in asset accumulation and wealth management in the United States,” Great-West Lifeco President Raymond McFeetors says in a statement.
After the deal is completed, Putnam will keep its name, managers, and investment, distribution and service teams, Great-West Lifeco says.
Great-West Lifeco will cover the cost of the proposed deal by using cash on hand; borrowing money through a bank credit facility; issuing stock, debentures and hybrids; and securitizing acquisition tax benefits, Great-West Lifeco says.
Great-West Lifeco is part of Power Corporation of Canada, Montreal, a company that was formed in 1925 to manage electrical power generation investments. The company now owns major businesses in the pulp, paper and media industries as well as in financial services.
News of the Great-West Lifeco deal negotiations surfaced in the Wall Street Journal Dec. 29, 2006.
Even before Great-West Lifeco announced the Putnam deal, Great-West Lifeco and Canadian competitors have been active acquirers in the U.S. market.
- Manulife Financial Corp., Toronto, acquired John Hancock Financial Services Inc., Boston, in 2004.
- Great-West Lifeco itself moved in late 2006 to acquire a block of 1,900 defined contribution retirement plans with $9 billion in assets from a unit of U.S. Bancorp Inc., Minneapolis, and a block of 2,600 small and midsize plans with $7.5 billion in assets from a unit of MetLife Inc., New York.
- Sun Life Financial Inc., Toronto, agreed in January to pay $650 million for the employee benefits business of Genworth Financial Inc., Richmond, Va.