Federated Investors Inc. and Putnam Investors of Boston announced yesterday a finalized agreement to liquidate the $12.3 billion institutional Putnam Prime Money Market Fund (PPMXX) and give those investors shares of the Federated Prime Obligations Fund (PDIXX) on a $1-to-$1 per-share basis.
Under the agreement, the Putnam fund purchased shares in Federated fund with cash and portfolio securities valued at $12.3 billion, said Putnam spokeswoman Laura McNamara.
The Putnam Prime Money Market Fund was liquidated as of 5 p.m. Wednesday.
As of today, shareholders may purchase, redeem or continue to hold shares in the Federated fund, she said.
The Pittsburgh, Pa.-based Federated had approximately $248 billion in money market mutual fund assets as of Sept. 22.
The $22.1 billion Prime Obligations Fund is AAAm-rated.
The deal follows last week’s announcement by Putnam that its board of trustees voted to close and liquidate the institutional Prime Money Market Fund effective Sept. 17.
Federated’s money market portfolio managers have reviewed the securities in the Putnam fund to ensure that the transaction meets its credit requirements, the firm said in an announcement.
Shareholders of Putnam Prime Money Market Fund will be entitled to dividends through Sept. 24.
The accumulated, but unpaid, dividends will be paid on Sept. 25 by Putnam.
Such shareholders will be entitled to dividends from Federated Prime Obligations Fund beginning Sept. 25.
As of Aug. 31, Putnam manages $163 billion in assets.
Federated Investors Inc. managed $333.5 billion in assets as of June 30.