Columbia Threadneedle Investments is to assume BMO's EMEA asset management business, growing firm AUM to $671bn, ahead of a £615m deal struck by parent company Ameriprise Financial.
Ameriprise has signed a definitive agreement with BMO Financial Group to acquire the business in an all-cash transaction, which adds $124bn to the group's European AUM and brings total AUMA to $1.2trn.
The deal, which is expected to close in the fourth quarter of 2021, subject to regulatory approvals, "will further accelerate" Ameriprise's strategy of growing its fee-based businesses, and grow its wealth and asset management capabilities.
Ameriprise said the move "complements" Columbia Threadneedle Investments' core business and global growth strategy, adding a "substantial presence" in the European institutional market and expanding its investment capabilities to meet growing client demand.
It will significantly increase EMEA AUM to 40% of total Columbia Threadneedle AUM.
The firm highlighted BMO's capabilities in responsible investment, liability-driven investing, fiduciary management and European real estate as key benefits of the deal, as well as adding "depth and breadth in other traditional asset classes".
In addition, the acquisition establishes a strategic relationship with BMO Wealth Management, giving its North American wealth management clients opportunities to access a range of Columbia Threadneedle investment management solutions.
The transaction also includes the opportunity for certain BMO asset management clients to move to Columbia Threadneedle, subject to client consent. It is expected to be accretive in 2023 and to generate an internal rate of return of 20%.
"Given the firm's substantial excess capital position and free cash flow generation, the company's capital return strategy remains on track," Ameriprise added.
From the perspective of BMO Wealth Management, group head Joanna Rotenberg said Columbia Threadneedle Investments is a "strong strategic and cultural fit for our EMEA asset management business and is well positioned to take it to the next level of growth by extending its reach, scale and investment capabilities".
Chairman and CEO of Ameriprise Financial Jim Cracchiolo said: "BMO's EMEA asset management business will be a great addition to Columbia Threadneedle that will deliver meaningful value for clients and our business.
"This strategic acquisition represents an important next step as we expand our solutions capabilities, broaden our client offering and deepen our talented team. We are a disciplined acquirer and believe this transaction will build on our track record of successful acquisitions for the benefit of clients and our other stakeholders."
CEO of Columbia Threadneedle Investments Ted Truscott added: "Adding BMO's EMEA asset management business is an exceptional growth opportunity. The transaction advances our strategy and enhances our geographic and asset class diversification, enabling us to serve more clients and meet more of their needs. Critical to this opportunity is the strong alignment between our organisations.
"We share a client-centric culture, fundamental belief in active management, collaborative and research-based investment approach, and long-held commitment to responsible investment principles."