Morningstar announced it has agreed
to acquire Ibbotson Associates, the asset allocation research and
consulting firm, for $83 million in cash.
The deal is expected to close in the first quarter of 2006.
"Ibbotson's expertise in asset allocation and
Morningstar's expertise in security selection and investment research
is a powerful combination," says Joe Mansueto, chairman and chief
executive officer of Morningstar. "Our companies share many
similarities, and we have a firm commitment to helping investors reach
their financial goals. I have long admired Ibbotson's work, and this
acquisition is a logical move that will further strengthen
Morningstar's institutional and advisor businesses."
Professor Roger Ibboston, founder of Ibbotson
Associates, and Mike Henkel, president of the firm, plan to stay with
the company.
"Ibbotson is a good fit with Morningstar's
culture. Our missions are very similar; we are both focused on
solving investor problems," Ibbotson said. "Joe and I both started our
companies as boot-strap ventures, and we run our businesses with an
entrepreneurial spirit. We have worked with each other for many years
and I can't think of a better partner for our business."
Ibbotson's portfolio and asset management business,
which constructs actively managed fund of funds offerings for financial
institutions, is expected to expand Morningstar's existing investment
management business.
Ibbotson currently has about $3.5 billion in assets
under management for participants in 401(k) and other defined
contribution plans and manages assets on behalf of several major
retirement plan providers. About 12 million retirement plan
participants have access to Morningstar's suite of retirement planning
services through about 69,000 plan sponsors and 30 plan providers.
Ibbotson had $37.2 million in revenue for its fiscal year ending June 30, 2005.
"Ibbotson has developed a tremendous amount of
original intellectual capital concerning asset allocation and advice
solutions for investors," Henkel says. "Asset allocation alone is not
enough to deliver a complete solution to investors. Morningstar's data,
research, ideas, and global reach give us a chance to collaborate,
combine the best of both our organizations, and bring our work to its
fullest potential."
Morningstar says the acquisition will make it one of
the largest independent providers of managed retirement accounts in the
industry.
"This acquisition fits with several of Morningstar's
growth strategies," says Mansueto. "We will immediately broaden our
reach in the areas of investment consulting, investment management and
managed retirement accounts. We're excited about joining forces with
Ibbotson to expand our range of services to investors around the globe."