CHICAGO — Morningstar Inc. will acquire Ibbotson Associates for $83 million in cash.
The main attraction of the deal, according to Joe Mansueto, Morningstar's chairman and chief executive officer, was how the two companies complement each other: Morningstar specializes in security selection and investment research, while Ibbotson is known for asset allocation research, software and consulting and portfolio construction. Both firms have growing managed account businesses that provide defined contribution plan participants with asset allocation advice or active management of assets. As of Sept. 30, Morningstar reported $226 million in this area and Ibbotson, $3.5 billion.
Each firm also has a large asset management business, providing customized funds of funds to a variety of clients, including mutual fund families and variable annuities providers, Mr. Mansueto said. Morningstar managed $11 billion in funds of funds assets, while Ibbotson had $1 billion as of Sept. 30. In addition, Morningstar and Ibbotson act as funds of funds consultants for $9 billion and $5 billion, respectively.
Mr. Mansueto said Ibbotson's EnCorr asset allocation software also was a big plus in the acquisition. Ibbotson's capital markets, optimization and investment management research and software tools will be available to Morningstar clients on its global platform.
Roger Ibbotson, Ibbotson's founder and chairman, and Michael Henkel, president, agreed to join Morningstar. Their titles and functions will be determined after the acquisition is completed, said Margaret Cohen, a Morningstar spokeswoman.
Mr. Henkel said in an interview that both he and Mr. Ibbotson are "in for the long haul" and neither had signed term contracts. "There are no (sunset) provisions in this deal," he said.
The deal is expected to close in the first quarter.
