A J.P. Morgan & Co. Inc. executive said paying $900 million to buy 45% of American Century Cos. should "make it clear J.P. Morgan is committed to defined contribution."
The accord includes an option for Morgan to buy another 5% over time, said Robert Birnbaum, managing director of Morgan's defined contribution group and asset management services.
New York-based J.P. Morgan needs American Century's expertise in retail mutual fund distribution, Mr. Birnbaum said. American Century is the fourth largest no-load mutual fund company, according to Morgan.
Through the partnership, Kansas City, Mo.-based American Century will gain access to commingled funds and separate accounts, two things the firm has developed only in a small way, said Thomas Kmak.
Mr. Kmak is senior vice president of direct marketing for American Century.
J.P. Morgan manages $234 billion in assets, of which $20 billion is institutional; about $9 billion of the $20 billion is defined contribution.
American Century manages $60 billion; one-third of that is institutional, of which about $7.5 billion is for defined contribution plans.
Mr. Birnbaum will establish and run a Kansas City office for Morgan's part in the combined operation.
Linda Kay Sakelaris