Early yesterday, a press release stated, "Bank of America has announced that it has reached a definitive agreement to sell Columbia Management's long-term asset management business to Ameriprise Financial. This includes the management of its equity and fixed-income mutual funds and separate accounts." Columbia's money fund business, the nation's 10th-largest, was not included in the deal and continues to be owned by Bank of America, though several reports speculated that it may.
The Boston Globe reports, Bank of America Corp. has found a buyer for its Boston-based mutual fund unit, Columbia Management. The banking giant, which has been peddling Columbia for at least five months, announced a deal yesterday to sell much of the business, including the Columbia name, to Ameriprise Financial Inc. of Minneapolis for as much as $1.2 billion in cash. Ameriprise, which was spun off from American Express four years ago, agreed to buy Columbia's flagship stock and bond fund business, which boasts $165 billion in assets. Bank of America is still considering a sale or other options for the rest of Columbia's business -- $170 billion in money market funds."
Bloomberg's story says, "Today's deal doesn't include Columbia's money-market funds, which managed $120.2 billion as of July 31. Columbia was the ninth-largest U.S. manager of money-market funds as of July 31, according to Crane Data LLC in Westborough, Massachusetts." Bloomberg adds, "`Bank of America continues to consider alternatives for the cash investments," the company said in a statement. (Columbia's asset numbers in paragraph two above likely include offshore and enhanced cash statistics, while the number Bloomberg cites counts only domestic U.S. money funds. The company's rank slipped from ninth to tenth from July to August.)
Columbia's money fund assets have been declining this year amidst the ultra-low rate environment and amidst the uncertainty surrounding its divestiture. Assets have fallen by 24.6% in the 12 months through August 31, or $36.15 billion, according to Money Fund Intelligence XLS.
The Columbia press release added, "This transaction combines two leading asset management firms and is projected to create one entity with nearly $400 billion in global asset management. It is anticipated that the combined U.S. asset management business will operate under the well-regarded Columbia Management brand and will continue to be primarily based in Boston. The combined U.S. asset management business will be led by Ted Truscott, currently president, U.S. asset management, annuities and chief investment officer, Ameriprise Financial. Michael A. Jones, currently president of Columbia Management, will serve as president, U.S. asset management. Colin Moore, chief investment officer at Columbia Management, will serve that role for the combined organization."
