Bloomberg News

Clayton Dubilier Said to Discuss Takeover of Hartford Fund Unit

June 27, 2011

June 27 (Bloomberg) -- Clayton Dubilier & Rice LLC, the New York-based leveraged buyout firm, is among remaining bidders pursuing a takeover of Hartford Financial Services Group Inc.’s mutual-fund unit, said people with knowledge of the matter.

A decision on the sale of the business, which may fetch $1.5 billion or more, is weeks away, said the people, who spoke on condition of anonymity because the talks are private. Affiliated Managers Group Inc., based in Prides Crossing, Massachusetts, and Tokyo-based Nomura Holdings Inc. are among firms that had expressed interest in the unit and are no longer involved in the discussions, the people said.

A buyer would get a business that has more than 50 mutual funds and $104 billion in assets under management. As most of the funds are managed by outside sub-advisers at Wellington Management Co. and Hartford’s own staff, much of the unit’s value is in relationships with retail brokerages that market its products, the people said. Hartford may opt to keep the business or sell to another bidder, one of the people said.

David Snowden, a spokesman for Hartford, declined to comment.

CD&R, founded in 1978, focuses on buying neglected divisions of larger companies and improving their performance. In 1993, it purchased Van Kampen Merritt Cos., an investment manager, from Xerox Corp. for about $395 million including debt. The business was combined with a Travelers Inc. fund unit in 1994 and sold to Morgan Stanley in 1996 for about $1.2 billion including debt.

The Hartford mutual-fund unit posted first-quarter net income of $28 million and revenue of $178 million, according to a regulatory filing by the company, based in the Connecticut city that bears its name.

Hartford Chief Executive Officer Liam McGee, hired in 2009, has reorganized the life insurance and savings business to conserve capital following losses under his predecessor, Ramani Ayer. McGee, 56, sold stock last year to help repay a $3.4 billion U.S. bailout and divested a Canadian mutual fund business.

--Editors: Peter Eichenbaum, Dan Kraut

To contact the reporters on this story: Zachary R. Mider in New York at zmider1@bloomberg.net; Andrew Frye in New York at afrye@bloomberg.net; Cristina Alesci in New York at calesci2@bloomberg.net

To contact the editors responsible for this story: Jennifer Sondag at jsondag@bloomberg.net; Dan Kraut at dkraut2@bloomberg.net


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