Last week, Amvescap of London and Atlanta announced it would purchase PowerShares Capital Management of Wheaton, Ill., sponsor of 36 exchange-traded funds, for an initial purchase price of $60 million in cash plus additional contingency payments of cash and/or stock over the next five years. The financial structure of the acquisition agreement could push the merger deal to as much as $730 million and largely depends on the growth of assets under management, an Amvescap spokesman said. The maximum amount could be earned by PowerShares principals if assets reach $125 billion.
The deal, which will expand the investment offerings of Amvescap's subsidiary AIM Investments of Houston, as well as significantly bolster the distribution of PowerShares' ETFs, is expected to close in the first or second quarter of 2006. Executives at PowerShares, including President and CEO Bruce Bond, are expected to continue for the foreseeable future.