NEW YORK & PHILADELPHIA - KKR, a prominent global investment firm, has entered into a definitive agreement to acquire Janney Montgomery Scott LLC, a leading wealth management, investment banking, and asset management firm with a history dating back to 1832. The transaction is poised to convert Janney into a privately held company that will continue its operations independently post-acquisition.
Janney, currently a wholly-owned subsidiary of The Penn Mutual Life Insurance Company, boasts over $150 billion in assets under administration and a network of more than 900 financial advisors across 135 offices in the United States. The deal, which is anticipated to be finalized in the fourth quarter of 2024, is contingent upon customary closing conditions and regulatory approvals.
Tony Miller, President of Janney, expressed enthusiasm for the new partnership with KKR, emphasizing the alignment of values and the potential for growth. KKR officials, including Partner Chris Harrington and Director Simon Greene, recognized Janney's reputable brand and client-focused culture as key drivers of its success and expressed their commitment to supporting Janney's growth trajectory.
As part of the acquisition, KKR plans to implement a broad-based equity ownership program for Janney's 2,300 employees, allowing them to share in the company's ownership and success. This decision reflects KKR's belief in employee engagement through ownership as a fundamental component of building stronger companies. KKR has a history of instituting similar programs across its portfolio companies.
Dave O'Malley, Chairman, President & CEO of Penn Mutual, highlighted the transaction as a favorable outcome for both Janney and Penn Mutual, marking the next phase of growth for Janney, which has been a solid investment for Penn Mutual's general account for the last four decades.
KKR is making the investment primarily through its North America Fund XIII. Ardea Partners acted as KKR's financial advisor, with Kirkland & Ellis LLP and Simpson Thacher & Bartlett LLP serving as legal advisors. Penn Mutual was advised legally by WilmerHale.
The information for this article is based on a press release statement.
In other recent news, KKR & Co. continues to make significant strides in the investment advisory sector. The company reaffirmed its Board of Directors, ensuring a diverse set of skills for the firm's governance and oversight. The directors will continue to be compensated under the existing director compensation program.
KKR has been involved in several significant financial transactions. The company has extended a $150 million financing agreement to Trinseo (NYSE:TSE), providing increased financial flexibility. Additionally, KKR, in partnership with Carlyle Group (NASDAQ:CG), acquired Discover Financial Services (NYSE:DFS)' student loan portfolio in a $10.8 billion deal. KKR and Palm Capital also purchased a logistics property in Greater Copenhagen, Denmark, expanding KKR's European real estate portfolio.
Investment firm Jefferies has raised the price target on KKR's shares to $126.00, maintaining a "Buy" rating, despite slight adjustments in the second quarter 2024 distributable earnings per share estimate and fee-related earnings per share. Jefferies anticipates a surge in deal volume in the latter half of 2024, which could significantly increase monetization.
On the mergers and acquisitions front, KKR and Francisco Partners are in the final stages of bidding for education software company Instructure, valued at $3.4 billion. These are some of the recent developments involving KKR, highlighting the company's active role in various sectors.
InvestingPro Insights
As KKR sets its sights on expanding its footprint in the financial services sector with the acquisition of Janney Montgomery Scott, the company's financial health and market performance become focal points for investors and industry observers alike. KKR, with a robust market capitalization of $104.73 billion, reflects not only its size but also its significance in the investment landscape.
InvestingPro data highlights a Price to Earnings (P/E) Ratio of 25.67, indicating investor expectations of future earnings growth, albeit at a value that suggests a premium compared to some industry peers. KKR's Price to Book (P/B) ratio stands at 4.89, which may signal that the market values the company's assets quite highly. These metrics, coupled with a staggering revenue growth of 323.59% over the last twelve months as of Q1 2024, paint a picture of a company on a strong financial trajectory.
InvestingPro Tips shed light on the strategic moves and market sentiment surrounding KKR. The firm has demonstrated a commitment to shareholder returns, having raised its dividend for 4 consecutive years, and maintained dividend payments for an impressive 15 years.
Moreover, KKR's stock has experienced a high return over the last year, with a 96.55% total return, and is currently trading near its 52-week high. These factors are indicative of KKR's robust market performance and could be seen as reinforcing the firm's solid position as it integrates Janney into its operations.
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