Franklin Templeton paid a total of $925 million for Putnam.
Understanding the Acquisition Cost
The acquisition of Putnam by Franklin Templeton involved a multifaceted payment structure, combining both stock and cash considerations. This strategic transaction amounted to a significant investment, reflecting the value placed on Putnam's assets and market position.
The total payment was structured as follows:
| Payment Type | Amount (Millions USD) | Timing | Description |
|---|---|---|---|
| Stock | $825 | Up-front at closing | Consideration paid in Franklin Templeton stock. |
| Cash | $100 | 180 days after closing | Cash payment made after a deferral period. |
| Total Payment | $925 | Combined stock and cash value. | Full acquisition price for 100% of Putnam. |
Details of the Payment Structure
The payment strategy employed by Franklin Templeton is common in large-scale mergers and acquisitions (M&A) and serves several strategic purposes.
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Stock Consideration: The larger portion of the payment, $825 million, was made in stock. Paying with stock allows the acquiring company, Franklin Templeton, to conserve its cash reserves while still completing a substantial acquisition. It also often helps align the interests of the acquired company's shareholders with those of the acquirer, as they become shareholders in the combined entity. This up-front stock component ensures immediate value transfer at the time of closing.
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Cash Consideration: An additional $100 million was paid in cash. This cash payment was scheduled to occur 180 days after the closing of the deal. Deferred cash payments can provide the acquirer with additional time to integrate the acquired business, assess its performance post-acquisition, and manage cash flow more effectively. It can also serve as a mechanism to tie payment to certain post-closing conditions or performance milestones, though the provided information specifies a fixed deferral period.
Total Transaction Value
By combining the stock consideration of $825 million and the cash consideration of $100 million, the total sum Franklin Templeton paid for 100% of Putnam amounts to $925 million. This comprehensive payment structure allowed Franklin Templeton to acquire Putnam while optimizing its financial resources and strategic positioning.
