AllianceBernstein Holding L.P. AB recently announced that it has inked an agreement to acquire all partnership interests and shares of U.K.-based global financial service provider, Autonomous Research. While neither of the companies disclosed the details of deal, per the market rumors, it is valued at nearly $110 million.
Seth Bernstein, AllianceBernstein's President and CEO said, “The combination of Autonomous and Bernstein positions AB to be the preeminent provider of the industry's highest quality independent research to our clients worldwide. Research is the foundation of our business, and investing judiciously in these capabilities will enhance AB's reputation and value proposition to all our clients."
Transaction Details and Benefits
The deal, still subject to regulatory approvals, is expected to close over the next few months. AllianceBernstein projects the acquisition to be marginally accretive to earnings by 2020, in lieu of modest up-front investment. It also is anticipated to further strengthen the company’s scale and global reach with offices across Europe, Asia and the United States.
Following the closure of the deal, each entity will likely be retaining their respective business model and even brand identity, initially. Erick Davis, CEO of Autonomous Research said, “The combination with AB will allow us to offer a complementary range of research and trading capabilities to a wider global audience.”
The announcement comes at a time when asset management industry is facing regulatory upheaval following the introduction of Markets in Financial Instruments Directive or Mifid II in Europe. This requires investors to pay separately for the research and trade executions, instead of having that covered by the margins paid for the trades.
Notably, most of the research houses have decided to pay from the research from their own pockets rather than passing the costs to investors. Therefore, asset management industry is likely to witness further consolidation going forward.
The acquisition is expected further strengthen AllianceBernstein’s revenue base and improve profitability.
The stock has rallied 15.1% over the past year against the industry’s decline of 19.5%.
Currently, AllianceBernstein carries a Zacks Rank #3 (Hold).
Stocks Worth Considering
Some better-ranked banks are Woori Bank WF, Ameriprise Financial, Inc. AMP and KKR & Co. L.P. KKR.
Over the past 30 days, the Zacks Consensus Estimate for Woori Bank’s current-year earnings has moved 18.4% upward. Its share price has surged 35.5% in the past two years. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ameriprise’s earnings estimates for 2018 have moved 2.1% upward over the past 30 days. Its shares have rallied 7.4% over the past two years. The stock has a Zacks Rank of 2 (Buy).
Also carrying a Zacks Rank #2, KKR has gained 35.6% over the past two years. Further over the past 30 days, the company’s earnings estimates for 2018 have risen 7.9%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
KKR & Co. L.P. (KKR) : Free Stock Analysis Report
Ameriprise Financial, Inc. (AMP) : Free Stock Analysis Report
AllianceBernstein Holding L.P. (AB) : Free Stock Analysis Report
Woori Bank (WF) : Free Stock Analysis Report
To read this article on Zacks.com click here.