Waddell & Reed to buy Mackenzie Investment Management for 2.69 times revenue

Weekly Corporate Growth Report, Sep 9, 2002

The Deal: Waddell & Reed Financial Inc. has signed a definitive agreement to acquire Mackenzie Investment Management Inc., the publicly-traded U.S. subsidiary of Canadian company Mackenzie Financial Group, for $74 million, or $4.05 per share. Mackenzie Financial, which owns about 85.7% percent of Mackenzie Investment, has agreed to vote its shares in favor of the transaction. The deal has also been approved by the boards of Waddell & Reed, Mackenzie Financial, and Mackenzie Investment and is expected to close by the end of the year.

Discussion: Mackenzie Investment is a majority owned subsidiary of Toronto-based Mackenzie Financial Corporation. The company provides, through various subsidiaries, investment management, marketing, distribution and other administrative services to Ivy Fund, which is a Massachusetts business trust registered as a U.S. open-end investment company with 16 portfolios as of March 31, 2002.

Waddell & Reed Financial is one of the oldest mutual fund managers in the United States. The company, through subsidiaries, administers more than 45 mutual funds, representing nearly $30 billion in assets. The company also offers variable annuity and life insurance products underwritten by Nationwide Financial Services, Inc. The company has more than 400 offices throughout the country, mostly in small cities and rural areas.

Waddell & Reed intends to maintain the Ivy Funds brand and use it for U.S. retail nonproprietary load:ftnd distribution.