Lee Munder to be acquired by City National

City National Corp. will acquire a majority stake in Lee Munder Capital Group and combine it with another affiliate, Independence Investments, according to a news release.

The combination will make Lee Munder the “primary institutional asset management affiliate” of City National, the release said.

Terms weren't disclosed.

City National is acquiring private equity firm Castanea Partners' stake in Lee Munder as well as a portion of founder Lee Paul Munder's majority stake, said Kenneth Swan, Lee Munder president.

Mr. Munder will remain as chairman of the firm, said Mr. Swan, who will serve as CEO of the combined firm.

The merger of Lee Munder and Independence will occur after the deal is closed sometime in the third quarter, resulting in an institutional money management firm with more than $4 billion in equity assets under management, according to the release.

Mr. Swan and Lee Munder CIO Jeffrey Davis will oversee investment decisions and risk management at the combined firm. Independence CIO Jay Leu, will be a portfolio manager for the combined company.

In a telephone interview, Mr. Swan called the deal “a nice win” for his firm, with a new owner that can provide “liquidity for the future” and a path for redistributing equity among the firm's investment professionals.

The planned merger follows a rough year for Independence Investments, where assets under management plunged 87% since the end of 2007, to $845 million as of March 31, according to eVestmentAlliance.

The money manager had $3.2 billion in client defections in 2008, adding to broader market-related declines.

Despite that tough stretch, Mr. Swan said Independence still has a “pretty substantial institutional client base,” noting that with Mr. Davis as CIO, there are areas “we can help them rebuild.”

Berkshire Capital Securities advised both City National and Lee Munder.

Jon Stern, a managing director with Berkshire, called the Lee Munder-Independence combination “indicative of other transactions” likely to take place this year, with firms coming together to offer a broader range of products with an efficient infrastructure.

City National spokesman Christopher J. Carey wasn't immediately available for comment.

Investment bank Cowen Group and Ramius, an alternative investment funds manager, are merging, pending approval by Cowen shareholders.

The deal is expected to close in the fourth quarter, according to a joint news release.

The combined firm will take the Cowen Group name while Ramius will continue to operate under its own name and serve as the firm's investment management unit, said a source close to the deal who asked not to be identified.

The newly combined firm will have $8.2 billion in assets under management, according to presentation materials available on Cowen's investor relations website.

Ramius' assets totaled $7.7 billion as of March 31, with $3 billion in hedge funds, $2.1 billion in hedge funds of funds, $1.6 billion in real estate and $1 billion in cash management.

Cowen's Healthcare Royalty Partners will bring $500 million to the new firm.

Peter A. Cohen, Ramius' founder and managing member, will be chairman and CEO of the combined firm, according to the news release. Greg Malcolm, Cowen Group's CEO and president, will retain those roles for the firm's broker-dealer subsidiary. Morgan Stark, a Ramius managing member, will serve as CEO of Ramius' internal asset management operations.

Thomas Strauss, managing member, will remain CEO of the Ramius hedge funds-of-funds family.

As part of the deal, Ramius and its investors will receive Cowen shares that will give them a 71.24% stake in the new company, while Cowen shareholders will own 28.76%, according to the release. As part of the transaction, the new company will buy back the 50% stake in Ramius' hedge fund-of-funds family from an unnamed third-party investor.

The firm will be headquartered in New York after the merger. No layoffs are planned among the combined 578 employees of both firms, according to the anonymous source.

Capital Research and Management Co. will lay off 820 people over the next two weeks, according to an internal memo the parent company of American Funds and Capital Guardian Trust sent to all employees on June 1, according to InvestmentNews, a sister publication of Pensions & Investments.

The reductions are being made across all companies and departments among the firm's 9,000 employees, said Chuck Freadhoff, spokesman for American Funds.

“We are meeting with each person individually to go over the severance package,” Mr. Freadhoff said.

No investment positions — including portfolio managers or analysts — are being eliminated, Mr. Freadhoff said. “We are still interviewing and recruiting in that area,” he said.

In March, employees were told to expect layoffs due to the depressed market and decline in assets, although the number of jobs was not specified at that time.

As of March 31, Capital Research and Management had $850 billion in assets under management, a decline from $1.2 trillion as of January 2008.

American Funds laid off 60 employees last fall and another 500 in January. The firm also eliminated merit increases this year and asked management to cut back on expenses.

American Funds and Capital Guardian Trust are based in Los Angeles.