Industry observers are lauding the prospect of a merger between Aim Management Group and Invesco PLC.
The mutual fund companies confirmed Thursday that they are in talks, but said no definite agreement has been reached. Their joint statement capped a week of intense speculation about an impending deal.
The price tag could total $1.08 billion, or 2% of Aim's managed assets, the standard for such deals. Sources said a merger would bring together companies with distinctly different strengths.
Houston-based Aim, which manages $54 billion, is a fast-growing stock fund shop with strong retail distribution. Its sales outlets include broker-dealers such as Merrill Lynch, and banks such as Citicorp, Chase Manhattan Corp., and NationsBank Corp.
Invesco, based in London with a U.S. subsidiary in Denver, has $90 billion in assets and is known for institutional and retirement products.
Both companies have good reasons for wanting to find a partner. Aim's chairman and chief executive, Charles T. Bauer, is 77, and is thought to be ready to cash out of the closely held company, which he helped found. Sources add that TA Associates, a Boston-based firm that owns 28% of Aim, could take advantage of the hefty price tags that money managers have commanded recently.
Invesco wants "to grow internationally and become a true global player," said Bruce Brewington, an analyst with Putnam, Lovell & Thornton in San Francisco. Finding a large partner in the United States would help bring Invesco closer to that goal.
Such a merger would help Invesco to shine an image tarnished by the departures of three money managers this year and by ties to Robert Maxwell, the late British newspaper magnate, whose pension funds were plundered while under Invesco's stewardship.
The public markets are hungry for offerings by money management companies, most of which are closely held. The last such company to go public was New England Investment Co. in September 1993, according to SNL Securities in Charlottesville, Va.
However, SNL's investment advisor index is up 18.14% year to date, versus an 11.35% gain by the Standard & Poor's 500 index. The investment advisory index is a market-weighted index of all publicly traded investment advisory companies.
