Deutsche Bank announced today that it will acquire Zurich Scudder Investments for $2.5 billion. For its part, Zurich will acquire a 76% stake in Deutsche Banks Deutscher Herold and 100% of Deutsche Banks insurance interests in Spain, Portugal and Italy, an acquisition valued at $1.5 billion. Threadneedle Investments, Zurichs U.K. asset management group, was not part of the deal and will remain with Zurich Scudder.
The deal also outlines a joint distribution agreement in which both groups will distribute insurance, investment and banking products throughout Europe and the U.S. Details of the distribution agreement are still being worked out, the companies announced.
After expenses and taxes, Zurich Financial Services is expected to net nearly $700 million from the sale. The agreement makes Zurich the exclusive provider of insurance products for Deutsche Banks 10 million retail and private banking clients in Germany, Italy and Portugal. It also gains access to Germanys pension and life insurance markets with its acquisition of Deutscher Herold.
Deutsche Bank, for its part, gains significant scale in asset management and increases its presence in the U.S. The deal catapults Deutsche from the ninth largest asset management group in the world to fourth largest behind Allianz, UBS and Fidelity.
The deal also makes Deutsche one of the largest asset managers in the U.S. As of June30, Zurich Scudder had $345.2 billion in assets under management. Currently Scudder is in the top 15 U.S. mutual fund managers with $113.6 billion in assets in more than 100 funds which are distributed through a network of 57,000 financial advisors and 75 broker/dealers. In addition, Scudder had $14.8 billion in private client assets, $207.6 billion in global institutional assets, $8.4 billion in European retail assets.
Tom Hughes, Deutsche Banks COO of asset management in North America, was named CEO of the combined asset management organization. Edmond Villani, Zurich Scudders CEO, will be chairman.