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Madison Dearborn Partners lead private equity acquisition of Nuveen Investments

Nuveen Investments, a provider of investment services to institutional and high-net-worth investors, has agreed to a USD6.3bn all-cash buyout from an investor group headed by Madison Dearb

Nuveen Investments, a provider of investment services to institutional and high-net-worth investors, has agreed to a USD6.3bn all-cash buyout from an investor group headed by Madison Dearborn Partners. The headline figure includes the assumption of existing debt of USD550m.

Nuveen Investments stockholders will receive USD65 in cash for each share of Nuveen Investments common stock, representing a premium of 20 per cent over the closing price of Nuveen Investments’ shares on June 19, and of 26 per cent to the 90-day average closing price of USD51.56. The offer also represents a 16 per cent premium to Nuveen’s all-time high of USD56.20 on January 11.

‘This transaction reflects an important step in our firm’s development and a compelling value for our stockholders,’ said Timothy R. Schwertfeger, who will remain chairman of Nuveen Investments following completion of the transaction but will be succeeded as chief executive by current president John P. Amboian.

‘This transaction by MDP, with an anticipated equity participation by management, will provide Nuveen Investments the opportunity to accelerate our development of new investment capabilities, products and distribution channels, and help us attract and retain top industry talent.

‘We believe that we will be able to develop even further our institutional and high-net-worth presence, our mutual fund business and our structured product expertise. Our highest commitment remains to continually meet the needs of our institutional and individual clients as well as the consultants and financial advisors who serve them.’

Following the recommendation of a special committee of independent directors, Nuveen Investments’ board unanimously approved the transaction and recommends that stockholders support it.

‘In its 109-year history, Nuveen Investments has created one of the best known and most highly trusted brands in the investment management industry,’ says Madison Dearborn Partners managing director Timothy M. Hurd.

‘We fully support Nuveen Investments’ growth strategies and our objective is to provide additional resources and flexibility to strengthen the company’s long-term strategic development. We believe that supporting the business in this way will sustain a very positive environment for high-performing professionals to excel and prosper.’

Chicago-based MDP has drawn upon its own and Nuveen’s relationships to assemble a group of financial advisors and investors that includes Merrill Lynch and Merrill Lynch Global Private Equity, Wachovia and Wachovia Capital Partners, Citi, Deutsche Bank and Deutsche Bank Investment Partners, and Morgan Stanley.

Says Nuveen’s lead independent director Duane R. Kullberg: ‘This provides an attractive valuation to public stockholders of Nuveen Investments while also addressing the needs of the company’s other important constituencies and putting the company in a strong position to continue its long-term success for the benefit of its clients and employees. The management transition marks the culmination of a highly successful 11-year period under Tim’s leadership during which our market value grew more than sevenfold.’

Under the agreement, Nuveen Investments may solicit proposals from third parties through up to July 19, a process in which Goldman Sachs has been engaged by the board of directors to assist. The acquisition is expected to be completed by the end of the year.

Nuveen’s legal advisors were Cravath, Swaine & Moore and Winston & Strawn, while the special committee’s financial advisor was Goldman Sachs and it received fairness opinions from both Goldman and Sandler O’Neill & Partners. The special committee’s legal advisor was Katten Muchin Rosenman. For MDP, Merrill Lynch served as lead transaction advisor and Kirkland & Ellis was legal advisor to the private equity group.

Nuveen Investments, which markets its range of specialised investment solutions under the brands of NWQ, Nuveen, Santa Barbara, Tradewinds, Rittenhouse and Symphony, managed USD166bn in assets at the end of March.

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