Ameriprise to acquire Columbia management from Bank of America
Bank of America Corp. has decided to sell the long-term asset management business of one of its units to Ameriprise Financial Inc., Minneapolis, for which the company will pay between $900 million and $1.2 billion in cash. This Columbia Management’s long-term asset management division has $165 billion in equity and fixed-income assets under management. The deal is expected to close in the spring of 2010.
When, Charlotte, North Carolina-based Bank of America was hit by the recession and mounting loan losses, analysts had predicted Bank of America could shed Columbia Management as part of its capital-raising efforts. However, the bank managed to raise the necessary money through other asset sales, stock offers and debt conversions.
Ameriprise said the acquisition will boost its earnings within one year, excluding integration costs. The financial also added that the acquisition will generate between $130 million and $150 million in annual cost savings, with about half of the savings being realized in the first year after the purchase is completed.
Combined with its current operations, Ameriprise will manage about $400 billion in assets after this deal which is expected to close in the spring of 2010.
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