A division of MDTA in Cambridge, Mass., MDT Advisers is a quantitative manager of about $300 million in mutual fund assets, and is also the advisor to approximately $6.8 billion in separately managed and institutional accounts. The transaction would add a significant quantitative element to Federated investment strategy, which currently leverages a blend of quantitative and fundamental analysis, said J. Christopher Donahue, president and CEO of Federated.
Officials with Pittsburgh-based Federated, which already manages $217 billion across 140 mutual funds and various separately managed account options, said the transaction would include an initial purchase payment of roughly $110 million. The majority of that would be paid at closing. A series of contingent payments based on growth and totaling as much as $130 million over the next three years, could be added.
The deal, which has been approved by the board of directors at Federated and shareholders of MDTA, should close in July. MDT, however, must seek the approval of its separately managed account holders to continue managing their assets. Based on current asset levels, when those separate account and mutual fund transactions are complete, officials said, Federated would manage about $38.7 billion in equity assets, an increase of 22% versus March 31 levels.
At the closing of the transaction, they added, Federated would own about 90% of the outstanding equity of MDTA and is eligible to acquire the remaining 10% by July 20, 2007.