Securing a foothold in the U.S. asset management business, Germany's Commerzbank agreed Tuesday to buy Montgomery Securities' asset management unit.
Terms of the deal were not disclosed. Investment bankers estimated that Commerzbank will pay $200 million for Montgomery Asset Management, which has $8 billion in private and institutional accounts and a family of 19 no- load mutual funds.
"The only reason we are selling the company is our need for capital to fund future growth," said Thomas W. Weisel, chairman of Montgomery Securities, a San Francisco-based investment bank.
"We will miss having MAM as part of our team, but the firm is being sold to a buyer of the highest quality."
The deal, which has been rumored for weeks, will bring Frankfurt-based Commerzbank Aktiengesellschaft a mutual fund family that focuses on U.S. growth stock, emerging markets, and international equities investments.
Observes said the acquisition will enable Commerzbank to compete with big U.S. banks, like Chase Manhattan Corp., that already have an established asset management businesses here.
"Most American banks try and grow their own, whereas for the foreign banks, who are not familiar in this market, it makes more sense for them to buy a known quantity," said Catherine F. Ellsworth, a senior consultant with the Spectrem Group.
Montgomery Asset Management's founding partner, R. Stephen Doyle, will continue to run the firm's day-to-day operations.
"It gives Commerzbank a North American platform. You can't impose a culture from Frankfurt, Germany, onto a San Francisco money management firm," Mr. Doyle said, adding that some 35 potential buyers had approached Montgomery. "We chose our suitor."
Under the deal, Montgomery Securities will retain its private client and prime brokerage units, which have custodial assets of $10.5 billion and $3.1 billion, respectively.