Franklin Resources, Inc. (NYSE:BEN) entered into a definitive agreement to acquire Putnam LLC from Great-West Lifeco Inc. (TSX:GWO) for $1.3 billion on May 31, 2023. The total potential transaction consideration and retained value is estimated to be $1.7-1.8 billion. Franklin Templeton will pay upfront consideration of $950 million-1.0 billion, consisting of 33.33 million Franklin Templeton shares at closing and $100 million in cash 6 months after closing. In addition, Franklin Templeton will pay up to $375 million in contingent consideration tied to revenue growth targets from the partnership. Lifeco will retain PanAgora, and realize the value of Putnam?s seed capital, which, together with closing adjustments, are estimated to be worth $375-425 million. Lifeco will also retain certain deferred tax assets related to Putnam. Great-West Lifeco will hold a 4.9% interest in Franklin Templeton on a long-term basis and will retain its controlling interest in PanAgora. Great-West Lifeco to allocate initial $25 billion of AUM to Franklin Templeton.

The transaction is contingent on regulatory and other customary conditions. The transaction is expected to close in the fourth quarter of 2023. The transaction is expected to be modestly accretive to run-rate adjusted EPS by the end of the first year after closing, inclusive of cost synergies. Morgan Stanley & Co. LLC and Rockefeller Capital Management served as financial advisors and Sullivan & Cromwell LLP served as legal counsel to Lifeco and Putnam Investments. Ardea Partners LP served as lead financial advisor and Broadhaven Capital Partners LLC provided financial advice to Franklin Templeton. David K. Boston and Danielle Scalzo of Willkie Farr & Gallagher LLP served as legal counsel.