Fleet Financial Group has won its controversial bid to acquire International Business Machines' mutual funds business.
Shareholders of the five IBM Funds approved the transaction on Wednesday. The deal, valued at $14 million, calls for Fleet Investment Advisors to assume management of the funds from IBM's money management subsidiary.
Fleet expects to wrap up the transfer by the end of this month, making the IBM Funds part of the banking company's proprietary Galaxy Fund family.
The IBM funds, with $639 million in assets, include a municipal bond fund and four socalled index funds, whose portfolios are structured to mirror the performance of well-known market barometers, such as the Standard & Poor's index of 500 stocks.
Protest from Vanguard
In approving Fleet as the funds' adviser, shareholders sanctioned a choice IBM made in April, after it put the fund complex on the block.
IBM's selection of Fleet drew protest from John Bogle, chairman of Vanguard Group, which bid unsuccessfully. Mr. Bogle maintained that IBM placed its own interests ahead of fund shareholders', and he asked the Securities and Exchange Commission to intervene.
But IBM never heard from the SEC, and proceeded with the vote, said a spokesman for the Armonk, N.Y., computer giant.
Fleet is "delighted" with the outcome, said Thomas Howe, executive vice president of Fleet Investment Services. "We believe we will be able to offer shareholders better features and services," he said.
The IBM funds have 68,000 shareholders, and Fleet plans to mine this new customer base to expand the reach of its Galaxy funds and proprietary variable annuity, Mr. Howe said.