Macquarie Group acquires Waddell & Reed in $1.7bn deal

February 2021 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

February 2021 Issue

In a $1.7bn deal which delivers immediate value and a significant premium to stockholders, Australia’s Macquarie Group is to acquire US asset management and financial planning company Waddell & Reed Financial, Inc.

Under the terms of the agreement, Macquarie Asset Management, the asset management division of Macquarie Group, will acquire all of the outstanding shares of Waddell & Reed for $25.00 per share in cash.

On completion of the transaction, Macquarie has agreed to sell Waddell & Reed’s wealth management platform to LPL Financial Holdings, Inc. – a US retail investment advisory firm, independent broker-dealer and registered investment adviser custodian – as well as enter a long-term partnership, with Macquarie becoming one of LPL’s top tier strategic asset management partners.

“Over the past few years, we have been focused on leveraging our strong heritage as the foundation for transforming our firm into a more diversified and growth-oriented financial services enterprise,” said Philip J. Sanders, chief executive of Waddell & Reed. “The long-term partnership between Macquarie and LPL as part of this transaction accelerates that transformation and ultimately will benefit our clients and independent financial advisers while delivering significant value to our stockholders.”

As a result of the transaction, Macquarie Asset Management’s assets under management (AUM) are expected to increase to over $465bn, with the combined business becoming a top 25 actively managed, long-term, open-ended US mutual fund manager by AUM, with the scale and diversification to competitively position the business to maintain and extend its high standards of service to clients and partners.

“The addition of Waddell & Reed and our enhanced partnership with LPL will significantly increase our ability to grow and invest in our combined business for the benefit of our clients,” said Martin Stanley, head of Macquarie Asset Management. “Ivy Investments’ complementary investment capabilities will provide diversification to Macquarie Asset Management’s capabilities and client base. The consideration offered reflects the quality of Waddell & Reed’s business and the future benefits of our partnership with LPL.”

The transaction has been approved by the boards of Waddell & Reed, Macquarie Group and LPL and is expected to close in the middle of 2021, subject to regulatory and stockholder approval and other customary closing conditions.

“Waddell & Reed advisers are highly experienced and well-respected throughout the industry,” said Dan Arnold, president and chief executive of LPL. “They are a terrific fit both culturally and strategically, and we welcome them to the LPL family. Looking ahead, we expect our capabilities and resources will benefit their practices and help them unlock additional value and growth. Additionally, we look forward to deepening our long-term partnership with Macquarie, which also positions us to explore additional long-term opportunities together.”

Serving as lead financial adviser to Waddell & Reed is J.P. Morgan Securities LLC. Wells Fargo Securities, LLC also served as financial adviser and Norton Rose Fulbright US LLP served as lead counsel. RBC Capital Markets served as exclusive financial adviser and Allen & Overy served as lead counsel to Macquarie.

Shawn Lytle, head of Macquarie Group in the Americas, concluded: “The acquisition of Waddell & Reed’s asset management business and our partnership with LPL significantly strengthens our position as a top 25 US actively-managed, long-term, open-ended mutual fund manager across equities, fixed income and multi asset solutions.”

Fraser Tennant