Continuing a stream of acquisitions that has spanned several years, Liberty Financial Cos. announced Thursday that it would pay up to $147.5 million for the investment firm Crabbe Huson Group Inc.
The deal between the Boston-based asset management company and Crabbe Huson of Portland, Ore., is expected to close in September. Liberty said it agreed to pay 90% in cash and 10% in newly issued common shares for the firm, which has $5.3 billion of assets under management.
Kenneth Leibler, president and chief executive officer of Liberty Financial, said Crabbe Huson's contrarian investment style was particularly appealing. None of Liberty Financial's 75 mutual funds use the contrarian strategy, which involves buying out-of-favor stocks in the hopes that their long-term returns will be profitable.
In recent years, Liberty Financial, which manages about $54 billion of assets, has planted its feet firmly in the buyer's market. In 1995, it purchased Newport Pacific Management, an investment management firm specializing in Asian equity markets. That year Liberty Financial also bought Independent Financial Marketing Group, a third-party marketing firm in Purchase, N.Y.
Liberty Financial, which markets extensively through banks, would fill a big gap in its product line with the acquisition of a growth fund company, said Robert Powell, vice president of Dalbar Inc., a consulting firm in Boston. "This gives a bank one more reason to keep Liberty on the preferred list, and it gives their customers one more good option to choose from."
Many of Crabbe Huson's funds, all of which are no-load, would become load funds after the deal closes. They would administered by Liberty Funds Distributor Inc., the distribution arm of Colonial Group Inc., which is wholly owned by Liberty Financial. Liberty Funds distributes the mutual funds of Colonial, Newport, and Stein Roe & Farnham Inc.
"We think it will open up a lot more distribution for the funds than they have today," said Mr. Leibler.
A spokesman for Crabbe Huson said the firm approached Liberty after one of its founders, Richard Huson, was diagnosed with cancer in February. Goldman, Sachs & Co. had previously advised Crabbe Huson to consider linking with Liberty Financial.
James Crabbe, who co-founded Crabbe Huson, would remain president and assume the role of chief investment officer of Crabbe Huson. Mr. Huson will retire.