Deutsche Bank said today it had agreed to purchase Zurich Financial Services's US fund unit, Scudder, in a $2.5 billion deal, catapulting it to fourth place among global asset managers.
Deutsche, Germany's largest bank, said it would swap 75.9 per cent of its $1.13 billion-valued insurance holdings group, VHDB, including insurer Deutsche Herold and its Bonnfinanz investment advisory arm plus other assets, for Scudder.
Zurich Financial, Europe's third-largest insurer, expects $700 million in net proceeds to flow into the group as a result of the deal. This is less than expected by many investors hoping for a sizeable cash injection to restore confidence in the firm.
Key to the deal is an agreement granting Zurich distribution access to Deutsche's retail banking branches and Deutsche, in turn, access to Zurich's. The accord includes co-operation in asset management, insurance and banking products.
Scudder had assets under management of $278 billion at June-end, meaning Deutsche paid 0.9 per cent of funds under management, at the lower range of recent similar transactions.
The deal was finally signed about one week later than expected following attacks on US landmarks on September 11th and subsequent market turbulence.
By 9.45 a.m. shares in Deutsche were up 4.23 per cent at euro 50.55 and Zurich Financial was 6.59 per cent higher at 275.00 Swiss francs.
For Zurich, the deal allows it to refocus management time on a return to growth rather than on trying to blend the Scudder and Kemper funds families with their disparate investment philosophies and distribution systems.