Schroders CEO Peter Harrison has flown to Chicago as the asset manager prepares to finalize its acquisition of Nuveen from TIAA, according to sources familiar with the matter. The deal, valued at $3.8 billion, is expected to close within days, creating a $1.3 trillion asset management giant.
Deal Background and Details
The acquisition, announced in September, will see Schroders acquire Nuveen, the $1.1 trillion asset manager owned by Teachers Insurance and Annuity Association of America (TIAA). The deal is structured as a cash-and-stock transaction, with TIAA receiving a 9.9% stake in Schroders. The move significantly boosts Schroders' presence in the US, where Nuveen is headquartered in Chicago.
CEO's Visit Signals Final Stages
Harrison's visit to Chicago is seen as a sign that the deal is in its final stages. He is expected to meet with Nuveen executives and TIAA representatives to finalize the integration plans. The acquisition has received regulatory approvals from the UK's Prudential Regulation Authority and the US Federal Reserve, with closing conditions expected to be satisfied imminently.
Impact on Schroders and Nuveen
The combined entity will have $1.3 trillion in assets under management, making it one of the largest asset managers globally. Schroders gains access to Nuveen's expertise in fixed income and real assets, while Nuveen benefits from Schroders' global distribution network. The deal is expected to generate cost synergies of $150 million annually within three years.
According to a Schroders spokesperson, the acquisition positions the firm for long-term growth in the US market, which is the world's largest asset management market. The deal also strengthens Schroders' balance sheet, with pro forma net debt to EBITDA ratio expected to remain below 1.5 times.
Market Reaction and Analyst Views
Shares in Schroders have risen 12% since the deal was announced, outperforming the FTSE 100. Analysts at Morgan Stanley have labeled the acquisition as a transformative move, with the potential to boost earnings per share by 8% in 2024. However, some analysts have raised concerns about integration risks and the complexity of merging two large asset managers.
The deal is expected to close by the end of the month, subject to customary closing conditions. The combined firm will have a presence in 37 countries and employ over 7,000 people.
