Continuing its mutual fund acquisition drive, First Union Corp. announced Monday that it plans to buy a fund management company with extensive holdings in Florida.
The Charlotte, N.C., banking company hopes to complete its purchase of Palm Beach Investment Management Corp., which operates the $468 million- asset ABT Funds, by July. The deal is subject to approval from the funds' shareholders and the Securities and Exchange Commission.
The ABT Funds are tiny compared to the $3.1 billion-asset Evergreen Funds, which First Union acquired last year. But bank executives and experts said the funds would help round out First Union's mutual fund offerings. The company manages $7.2 billion in fund assets spread among 30 portfolios.
"With Evergreen, we got impressive performance on the equity side, and now ABT brings in great fixed-income performance as well as a large concentration of assets in Florida municipal bonds," said William R. Ennis, First Union's mutual fund director.
The ABT Funds include Florida tax-free and high-income municipal portfolios, as well as portfolios concentrating on growth and income, utility income, and domestic emerging growth.
Though the companies would not disclose the deal's price tag, Glen Casey, a consultant with Cerulli Associates in Boston, said it is probably worth about $10 million, or roughly 2% of the funds' assets.
The transaction will not include the sale of ABT's Florida Limited Term Tax Free Fund, which holds approximately $3 million of assets, First Union officials said.
Florida has been one of the fastest-growing markets for First Union since it entered the state in 1985. First Union's 552 Florida bank offices generate about 50% of the company's business, Mr. Ennis said.
Mr. Casey said the acquisition should help First Union fill a niche in its product line. But, he added, some of the funds in the ABT lineup "are awfully small and will need First Union's marketing muscle to get up to speed."
If the deal is approved, the combined assets of First Union's mutual funds will reach more than $7.6 billion, a number that Mr. Ennis said is "swiftly approaching critical mass."
Mr. Ennis, however, did not rule out further acquisitions of fund families down the road.