Federated Investors, a $130 billion-asset Pittsburgh money management firm that distributes through banks, announced Friday that it is buying Edgemont Asset Management Corp., which manages the Kaufmann Fund.

The fund, which invests in small and midsize companies for capital appreciation, manages $3.7 billion of assets, down from its 1997 peak of $6.1 billion.

As part of the purchase agreement, Edgemont owners and managers Lawrence Auriana and Hans Utsch are to remain with the company. The deal would extend the menu of stock portfolios available from Federated, most of whose assets are in money market funds.

The ultimate purchase price is to depend on revenue growth during the next six years. The initial price, $200 million, is less than 5% of the Kaufmann Fund’s assets. Federated could pay an additional $120 million to $220 million in the next six years.

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