BUSINESS
07/15/2011 07:14 EDT | Updated 09/14/2011 05:12 EDT

CIBC To Buy $848-Million Stake In American Century Investments

CP File

THE CANADIAN PRESS -- TORONTO - CIBC says it will acquire a 41 per cent equity interest in American Century Investments for $848 million.

Kansas City-based American Century is a major U.S. asset management company with US$112 billion under management.

CIBC says its share of American Century earnings is expected to contribute about 15 cents per share of earnings in 2012 on a cash basis.

The bank says it is purchasing the minority interest held by JP Morgan Chase & Co. and will hold 10.1 per cent of American Century Investments' voting rights and have two representatives on its 10-person board.

The transaction is expected to close within 90 days, subject to receiving regulatory approval.

CIBC president and chief executive officer Gerry McCaughey says the investment will provide the bank with an additional platform for growth in asset management internationally.

"It is aligned with our risk appetite and provides attractive fee-based income, geographic diversification and revenue synergies within our asset management business." McCaughey said in a statement.