Eaton Vance is adding another $6.4 billion to its $52 billion in assets under management through the purchase of Atlanta Capital Management. The Boston-based money manager said it will purchase 70 percent of the firm for $75 million. Atlanta Capital's employees will retain a 30 percent stake in the firm. The deal is expected to close on October 31.

UBS Warburg acted as financial advisor to Eaton Vance on the deal while Berkshire Capital and Cambridge International Partners acted as financial advisors to Atlanta Capital. At a little more than one percent of assets the deal's price highlights the difference in value between pure institutional managers and fund firms with a retail brand which have commanded a ratio of more than four percent of assets in recent deals.

The deal is structured so that 80 percent of the purchase price will be paid in cash and 20 percent will be paid in stock. Atlanta Capital's employees will have a right to sell to Eaton Vance their remaining 30 percent interest over a five-year period beginning in 2005. Eaton Vance will have the right to purchase the 30 percent minority interest in two stages in 2007 and 2009. The price for acquiring the 30 percent interest will be based on a multiple of earnings before interest and taxes in those years, the firm said.

Atlanta Capital (Atlanta, Georgia) will become an indirect subsidiary of Eaton Vance and will operate as a distinct and autonomous business unit, the company said. All eight of Atlanta's principals will remain with the firm, including Daniel W. Boone III, William R. Hackney III and Walter F. "Chip" Reames Jr.

The deal comes days after Eaton Vance purchased Fox Asset Management. Atlanta Capital focuses on institutional clients and offers large cap growth and small cap value equities and taxable fixed income investment strategies. The bulk of its assets are in the large cap growth strategy. It currently claims 80 institutional clients.

James B. Hawkes, chairman and chief executive officer of Eaton Vance, said that the purchase will complement the firm's strong individual-based business with an institutional brand.

"Atlanta Capital's products have a history of exceptional risk adjusted return compared with its peer group. That success has enabled Atlanta Capital to expand its separate account business, a segment of the market on which we are placing greater emphasis," he said in a statement. "Eaton Vance enjoys a clear leadership position in marketing products designed for individual investors, and Atlanta Capital's institutional client base will effectively round out the constituencies served by Eaton Vance. The marriage of our two companies will result in a better balanced, stronger company with exceptional growth opportunities."  

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