Author: Julie Dalla-Costa
Deutsche Bank has finally made its long-rumoured purchase of Scudder, the US investment house of Zurich Financial Services. The $2.5 billion deal, involving an asset swap, cash and shares, puts Deutsche Asset Management among the world's largest funds groups by assets under management, alongside Fidelity, UBS and Allianz.
Deutsche has picked Scudder up for around 1% of funds under management - a good price when compared with the top-of-the-market 4.07% that Alliance paid for Sanford Bernstein last year. For his part, Rolf Huppi, Zurich's chairman, calls the transaction "the closest thing to a dream deal". Zurich gets 75% of Deutsche's VHDB insurance unit, along with its insurance operations in Italy, Spain and Portugal.
Not all analysts are convinced by the deal, however. Some feel Deutsche is buying assets without much revenue. "It doesn't appear that the margins are all that huge on the business they're buying," says Derek Chambers, banks analyst at HSBC. "If they're going to make profits out of it they've got to reduce the related costs."
Scudder has certainly not had the greatest time of it recently, suffering big redemptions from mutual funds.