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AFFILIATED MANAGERS GROUP, INC. 8-K Report, Material Agreement (Feb 17, 2010)

Filed February 17, 2010For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) announced on February 10, 2010, a significant acquisition of Pantheon, a manager of private equity funds-of-funds, global secondary funds, and customized separate accounts, from Frank Russell Company. This strategic move involves a substantial cash outlay and potential performance-based payments, signaling AMG's intent to expand its alternative investment capabilities. The acquisition's total value could reach up to $925 million ($700 million at closing plus $75 million in the first year and up to $225 million in contingent payments). The transaction is subject to crucial client consent conditions, antitrust approvals, and other customary closing conditions, with an expected closing in the second quarter of 2010. The inclusion of a client access agreement with Russell, allowing for continued marketing and fee sharing, indicates a focus on seamless integration and revenue continuity.

Key Highlights

  • 1AMG to acquire Pantheon, a specialized manager of private equity funds-of-funds, global secondary funds, and customized separate accounts.
  • 2Total potential transaction value up to $925 million, comprising $700 million at closing, $75 million in the first year, and up to $225 million in contingent payments.
  • 3Acquisition is contingent upon receiving consents from clients representing at least 80% of Pantheon's annual advisory fees.
  • 4Transaction expected to close in the second quarter of 2010, subject to regulatory and antitrust approvals (e.g., Hart-Scott-Rodino).
  • 5A client access agreement allows Russell to market certain Pantheon products and receive a portion of management fees from Russell clients.
  • 6The deal represents a significant expansion of AMG's alternative investment platform and geographic reach.
  • 7Customary representations, warranties, and covenants are included in the Purchase Agreement, along with a working capital adjustment.

Frequently Asked Questions

AMG is acquiring the interests in Pantheon Ventures Inc., Pantheon Holdings Limited, and Pantheon Capital (Asia) Limited from Frank Russell Company. Pantheon is a manager of private equity regional funds-of-funds, global secondary funds, and customized separate accounts.

The total potential commitment for AMG is up to $925 million. This includes $700 million at closing, an additional $75 million in cash payments over the first year post-closing, and potential contingent payments of up to $225 million based on the performance of the Pantheon business through 2014.

The transaction is subject to several conditions, most notably the receipt of consents from clients representing at least 80% of Pantheon's aggregate advisory fees as of November 30, 2009. Other conditions include the expiration of the Hart-Scott-Rodino waiting period, other antitrust approvals, and other customary closing conditions.

Frank Russell Company will receive significant payments for the acquisition. Additionally, under a client access agreement, Russell will be permitted to market certain Pantheon investment products to its clients and will receive a portion of the management fees generated from these client investments for a period of five years.