ReliaStar Financial Corp. Acquires Pilgrim Capital Corp. in $258 Million Stock-and-Cash Transaction

Strategic Insights -

ReliaStar Financial Corp., a Minneapolis-based holding company, has announced the acquisition of Pilgrim Capital Corp., a Phoenix-based asset management and mutual fund company, in a $258 million stock-and-cash transaction. The deal, valued at $258 million, includes ReliaStar's assumption of approximately $31 million of Pilgrim debt. The acquisition is expected to enhance ReliaStar's presence in the mutual fund marketplace by expanding its product offerings and increasing its size. The combined operation will have a family of 32 mutual funds representing assets under management of approximately $12 billion and combined annual sales of $2 billion.

Key Takeaways:

  • ReliaStar Financial Corp. acquires Pilgrim Capital Corp. in a $258 million stock-and-cash transaction, valuing Pilgrim at $258 million and including the assumption of $31 million in Pilgrim debt.
  • The acquisition is expected to enhance ReliaStar's presence in the mutual fund marketplace by expanding its product offerings and increasing its size.
  • The combined operation will have a family of 32 mutual funds representing assets under management of approximately $12 billion and combined annual sales of $2 billion.
  • ReliaStar expects to take a pre-tax restructuring charge of approximately $15 million related to the integration of ReliaStar's Northstar mutual fund operation into Pilgrim's operations.
  • The transaction is expected to close late in the fourth quarter of 1999 and is subject to normal closing conditions, including approval by Pilgrim's shareholders, fund trustees/directors, and fund shareholders, as well as various regulatory approvals.
  • The acquisition will give ReliaStar greater economies of scale in its mutual fund operation, resulting in lower unit costs and increased sales and profitability.
  • ReliaStar said it expects the transaction to be accretive to earnings in 2000.

Statistics:

  • $258 million: the deal's value, including the assumption of $31 million of Pilgrim debt.
  • $12 billion: the combined assets under management of the mutual funds in the new operation.
  • $2 billion: the combined annual sales of the mutual funds in the new operation.
  • 32: the number of mutual funds in the new operation.
  • $15 million: the pre-tax restructuring charge expected by ReliaStar related to the integration of ReliaStar's Northstar mutual fund operation into Pilgrim's operations.
  • 11%: the proportion of ReliaStar's total business unit operating earnings expected to come from the combined operation.
  • 1999: the expected completion year of the acquisition, with the transaction closing late in the fourth quarter.

Sources:

  • "ReliaStar Financial Corp. and Pilgrim Capital Corp. Announce Agreement for ReliaStar to Acquire Pilgrim" (PRNewswire, July 22)
  • "ReliaStar Financial Corp. Announces Acquisition of Pilgrim Capital Corp." (ReliaStar Financial Corp. Press Release, July 22)
  • "Pilgrim Capital Corp. Press Release" (Pilgrim Capital Corp., July 22)