BlackRock Inc., Franklin Resources Inc. and Federated Investors Inc. made preliminary offers to buy Bank of America Corp.'s mutual fund unit, people familiar with the matter said.
Additional companies may participate in the bidding, which is not open to leveraged buyout firms, said the people, who asked not to be identified because the process is private. The Columbia Management unit, which oversees $341 billion, may fetch more than $2 billion, said Michael Kim, an analyst with Sandler O'Neill & Partners LP in New York.
Kenneth Lewis, Bank of America's chief executive officer, put Columbia up for sale after loan losses and writedowns forced B of A, the largest U.S. bank by assets, into a $45 billion bailout by the federal government.
Scott Silvestri, a B of A spokesman, declined to comment, as did officials for BlackRock, Franklin and Federated.
Columbia managed $186 billion in money market funds as of Dec. 31 and has more than 90 stock and bond funds. Its $10 billion Columbia Acorn Fund outperformed 90% of its rivals in the past five years. The unit had a loss of $459 million in 2008 after spending $1.1 billion to support money funds that were in danger of falling below the $1-a-share net asset value, B of A said in a February regulatory filing.
BlackRock is ready to bulk up two years after acquiring the investment unit of Merrill Lynch & Co. Inc. for $9.5 billion, according to Robert Lee, an analyst covering asset managers at KBW Inc.'s Keefe, Bruyette & Woods Inc. in New York. The acquisition doubled BlackRock's assets, to more than $1 trillion, vaulting it to the top position among publicly traded U.S. asset managers.
B of A, of Charlotte, owns 47% of BlackRock, a stake it inherited when it bought Merrill in January for $29 billion in stock.
Laurence Fink, BlackRock's CEO, said in an April 21 conference call he would be interested in increasing his firm's position in retail funds through acquisitions. The New York firm oversees $1.3 trillion, mostly for institutions. "I'm not going to talk specifically about any institution, whether it's Columbia or anything else, on this call, but I think Columbia is a great institution," he said. "It has a very good presence."
Federated Investors, the third-biggest manager of money market funds, in the past three years has made six acquisitions as it seeks to appeal to a wider base of investors. The Pittsburgh firm manages about $409 billion of assets, including $360 billion of money market funds.
Franklin, which is based in San Mateo, Calif., and manages $394 billion, is interested in acquisitions, its CEO Greg Johnson said in an April 28 conference call with analysts and investors.