Great-West Lifeco (TSE:GWO) is set to part ways with Putnam Investments, selling it off to Franklin Resources (NYSE:BEN) for a sum close to $1.4 billion. This sale allows Lifeco to narrow its focus on retirement and personal wealth strategies within the U.S. market and grants it a 4.9% stake in Franklin Templeton. The deal is a boon for Franklin Resources, too, allowing it to broaden its retirement sector business and bolster Franklin Templeton’s defined contribution assets under management to roughly $90 billion.
Franklin Templeton will pay an upfront amount of between $950 million to $1 billion, composed of 33.33 million BEN shares at closing and $100 million of cash six months post-closing, followed by payments up to $375 million tied to revenue growth targets for three to seven years post-closing. The deal is anticipated to modestly boost Franklin Resources’ run-rate adjusted EPS by the end of the first year after closing.
Meanwhile, Lifeco will maintain PanAgora, its quantitative asset manager, and the value of Putnam’s seed capital. Alongside closing adjustments, these are estimated to be worth between $375 million to $425 million. The deal is set to be sealed in Q4 2023, and Lifeco has committed to retain its Franklin Templeton shares for at least five years, which would result in a roughly 6.2% stake in Franklin Resources.
Turning to Wall Street, analysts have a Moderate Sell consensus rating on BEN stock based on zero Buys, three Holds, and four Sells assigned in the past three months, as indicated by the graphic above. In addition, the average price target of $22.79 per share implies almost 5% downside potential.
