Morningstar expects to get $10 million in cash tax benefits as a result of the cancellation of Ibbotson stock options, so in reality the Chicago-based fund tracker will be buying Ibbotson for the bargain-basement price of $73 million.
"Ibbotson's expertise in asset allocation and Morningstar's expertise in security selection and investment research is a powerful combination," said Joe Mansueto, chairman and CEO of Chicago-based Morningstar, in a statement. "Our companies share many similarities, and we have a firm commitment to helping investors reach their financial goals. I have long admired Ibbotson's work, and this acquisition is a logical move that will further strengthen Morningstar's institutional and advisor business."
"Ibbotson is a good fit with Morningstar's culture," said Roger Ibbotson, founder of Chicago-based Ibbotson, in a statement. "Our missions are very similar; we are both focused on solving investor problems. Joe and I both started our companies as bootstrap ventures, and we run our businesses with an entrepreneurial spirit. We have worked with each other for many years and I can't think of a better partner for our business."
As a result of the combination, the firms will create a stronger business, not only in size but also in range of services, the executives said.
