Manning & Napier goes private, sells at 41% premium to Callodine

Manning & Napier, a 52-year-old investment management firm with nearly $20 billion under management, is being acquired by a relative upstart with big growth plans.

Callodine Group, a Boston-based firm founded in 2018 by Fidelity Investment portfolio management veteran James Morrow, has agreed to pay a 41% premium for Manning & Napier’s stock as part of deal that includes taking the Rochester, New York-based firm private.

Callodine, which manages approximately $2 billion across public equity and private credit portfolios, is acquiring Manning & Napier along with the private investment firm East Asset Management.

Callodine has made two acquisitions over the past year, but this marks its first move into the mutual fund space, an area Morrow is familiar with after spending two decades at Fidelity, where he managed $40 billion.

According to Morrow, there are no plans for layoffs among the approximately 300 Manning & Napier employees; the investment management operation will remain in Rochester, and the brand will not change.

Chief Executive Marc Mayer will remain in the role after the deal is completed, which is expected to occur by the third quarter of this year.

Following the close, Manning & Napier will become a wholly owned subsidiary of Callodine.

Regarding the price of the acquisition, Morrow said, “We have a positive view of the value of the business.”

“We view Manning & Napier as a best-in-class asset manager,” he added.

Prior to the Friday morning announcement, Manning & Napier shares were trading at just over $9, representing a 12% gain from the start of the year. The stock price climbed to nearly $13 a share when the market opened, reflecting the 41% premium being paid.

Even though the share price looks impressive this year compared to a 5% decline by the S&P 500 Index over the same period, the asset manager’s stock price has been a laggard ever since it went public in 2011 at $12 a share.

Todd Rosenbluth, head of research at ETF Trends, said the timing and the deal structure hit all the right notes.

“The asset management business is extremely competitive, and it can be harder to grow as a publicly traded company due to greater scrutiny on firm profitability,” he said.

In a statement, Mayer praised Callodine as a “long-term investor with deep roots in upstate and western New York, and a natural fit for us, culturally and strategically.”

"We view the combination with Callodine as providing significant benefits to all stakeholders,” he added. “This partnership will drive our next phase of responsible and thoughtful growth, which will create opportunities for our employees and will further strengthen our ties to our communities."