Meyer Guggenheim
Readers may be wondering about the status of Deutsche Bank’s negotiations with Guggenheim Partners regarding the sale of the bank’s US asset management units, including DWS, RREEF and Deutsche Insurance Asset Management. After all, it was more than three weeks ago that press reports had indicated that the Deutsche supervisory board would be meeting to finalize the deal with Guggenheim and that a public announcement was imminent.
But so far there has been no such announcement.
During the bank’s quarterly conference call with analysts on April 26, CFO Stephan Krause said negotiations were “going in the right direction.” But he also said: “We still have decisions to make at Deutsche Bank regarding what components and what divisions to sell and that’s still open.” And he admitted that the uncertainty surrounding the fate of the US units had affected quarterly results, reporting that the asset management division was “impacted by lower client activity based on the on-going strategic review we have for this business segment.”
Then an article appeared that weekend in the Financial Times claiming that negotiations had “stalled” and that “fresh concerns have emerged” over Deutsche Bank’s plans to sell the units to Guggenheim Partners.
Financial Times reports that Christopher Wheeler, an analyst at the Italian investment bank Mediobanca said that the delay was “every seller’s worst nightmare,” and that the longer negotiations drag out the more likely the prospect of managers “walking out, and taking clients with them.” Reacting to the units’ weak quarterly results, Wheeler said “performance is falling off as this is a people business.”
Wheeler also characterized Guggenheim Partners as “a bit quirky” and “one of the few [potential suitors] willing to look at the whole package” of Deutsche’s US asset management businesses, as opposed to just the life insurance unit, which several big name suitors are reportedly interested in buying.
In a recent interview with Bloomberg TV, Guggenheim Partners CEO Alan Schwartz commented on the proposed acquisition. Count how many times he uses the word “separate.”
“If we do the deal – we’re in exclusive negotiations – we will acquire it as a separate entity. It’s something we did earlier with the assets in Security Benefit Life. I think it’s very important. It’s a really intelligent way to do it. It’s a separate entity. It will not put any pressure or disruption on our existing asset management business, which will stay focused on its customers and its products. And it’s a lot of momentum. Over time, as we own or control the group – we won’t own it directly, but in a separate investment, with a separate investment group – we will be able to see if there are any synergies between the two. But we’ll have a separate management team that will be rolling out that business under our direction. “
Schwartz added that Henry Silverman, the former CEO of scandal plagued Cendant Corporation, who headed that company while it was being sued by several pension funds in what was the largest securities class action of its day, has been recruited by Guggenheim to help “oversee “ the process of absorbing the Deutsche Bank units (in all their separateness) since “Henry has experience doing that and he’ll be able to devote his time to ensure that it’s done properly with the management team that we’ll take on that is already part of the asset management business at Deutsche Bank.”
