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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): March 20, 1998
AFFILIATED MANAGERS GROUP, INC.
(Exact name of Registrant as specified in charter)
Delaware 001-13459 043218510
(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)
Two International Place, 23rd Floor, Boston, MA 02110
(Address of principal executive offices) (Zip Code)
(617) 747-3300
(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets
On March 20, 1998, Affiliated Managers Group, Inc. ("AMG") acquired a
68% interest in Essex Investment Management Company, LLC ("Essex"),
successor to Essex Investment Management Company, Inc. In the transaction, a
wholly-owned subsidiary of AMG merged into Essex Investment Company, Inc.
with AMG paying $69.6 million in a combination of cash and the assumption of
liabilities (all of which were satisfied at closing), and 1,750,942 shares of
AMG's newly designated Series C Non-Voting Convertible Stock (the "Series C
Stock"). Each share of Series C Stock will automatically convert into one
share of AMG's Common Stock, $.01 par value per share, on March 20, 1999, or
upon certain extraordinary events. Following the transaction, senior
executives at Essex own the remaining 32% interest in Essex.
This transaction will be accounted for under the purchase method of
accounting. AMG financed the cash portion of the purchase price out of
borrowings under AMG's existing $300 million revolving credit facility.
Essex is a Boston-based investment advisor which manages approximately
$4.6 billion for a variety of institutional and private clients. Founded in
1976 by Joseph C. McNay, Chairman and Chief Investment Officer, Essex
specializes in investing in growth equities and fixed income securities
employing a fundamental research-driven approach. As part of the transaction,
Mr. McNay, as well as Steven D. Cutler, President, and Steven R. Clark,
Executive Vice President, entered into ten (10) year employment contracts
with Essex.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired.
Audited balance sheets of Essex Investment Management Company, Inc. as of
November 30, 1997 and November 30, 1996 and audited statements of income and
cash flows for the three years ended November 30, 1997.
To be filed by amendment on or before June 3, 1998.
(b) Pro Forma Financial Statements.
Pro forma condensed balance sheet as of December 31, 1997, pro forma
condensed statements of income for the year then ended, and accompanying
explanatory notes.
To be filed by amendment on or before June 3, 1998.
(c) Exhibits.
Number Description
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2.7 Agreement and Plan of Reorganization, dated as of January 15, 1998, by
and among Affiliated Managers Group, Inc., Constitution Merger Sub,
Inc., Essex Investment Management Company, Inc. and certain
stockholders of Essex Investment Management Company, Inc. (1)
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2.8 Amendment to Agreement and Plan of Reorganization dated March
19, 1998, by and among Affiliated Managers Group, Inc., Constitution
Merger Sub, Inc., Essex Investment Management Company, Inc. and
certain of the stockholders of Essex Investment Management Company,
Inc. (1)
10.15 Essex Investment Management Company, LLC Amended and Restated Limited
Liability Company Agreement dated March 20, 1998, by and among
Affiliated Managers Group, Inc. and the members identified therein.
(1)
10.16 Form of Employment Agreement. (1)
99.1 Press release, dated January 15, 1998 (filed for informational
purposes).
99.2 Press Release, dated March 20, 1998.
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(1) Incorporated by reference to the exhibit of that number in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AFFILIATED MANAGERS GROUP, INC.
By: /s/ Sean M. Healey
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Name: Sean M. Healey
Title: Executive Vice President
DATE: April 3, 1998
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EXHIBIT INDEX
Number Description
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2.7 Agreement and Plan of Reorganization, dated as of January 15, 1998,
by and among Affiliated Managers Group, Inc., Constitution Merger
Sub, Inc., Essex Investment Management Company, Inc. and certain
stockholders of Essex Investment Management Company, Inc. (1)
2.8 Amendment to Agreement and Plan of Reorganization dated March
19, 1998, by and among Affiliated Managers Group, Inc.,
Constitution Merger Sub, Inc., Essex Investment Management Company,
Inc. and certain of the stockholders of Essex Investment Management
Company, Inc. (1)
10.14 Amended and Restated Limited Liability Company Agreement of Essex
Investment Management Company, LLC, dated March 20, 1998. (1)
10.15 Form of Employment Agreement. (1)
99.1 Press release, dated January 15, 1998 (filed for informational
purposes).
99.2 Press Release, dated March 20, 1998.
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(1) Incorporated by reference to the exhibit of that number in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997.
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EXHIBIT 99.1
AFFILIATED MANAGERS GROUP, INC. TO MAKE INVESTMENT IN ESSEX INVESTMENT
MANAGEMENT COMPANY, INC.
BOSTON, Jan. 15 --Affiliated Managers Group, Inc. (NYSE: AMG) and Essex
Investment Management Company, Inc. ("Essex") announced today that they have
reached a definitive agreement to merge a subsidiary of AMG with Essex,
following which AMG will own 68% of Essex's successor, Essex Investment
Management Company, LLC, with management acquiring the remaining 32%.
Essex is a Boston-based investment advisor which manages approximately $4.3
billion for a variety of institutional and private clients. Founded in 1976,
by Joseph C. McNay, Chairman and Chief Investment Officer, Essex specializes
in investing in growth equities and fixed income securities employing a
fundamental research-driven approach. AMG is a Boston-based asset management
holding company which acquires majority interests in mid-sized investment
management firms. AMG's strategy is to generate growth through investments in
new affiliates, as well as through the internal growth of existing affiliated
firms. Currently, AMG has ten affiliates with aggregate assets under
management of over $45 billion.
Essex will become the first new affiliate for AMG since AMG's initial public
offering in November of 1997. Upon closing of the transaction, AMG will have
eleven affiliates which will collectively manage approximately $50 billion.
William J. Nutt, AMG's President and Chief Executive Officer noted that,
"We are extraordinarily pleased to form a partnership with Essex and its
management team. We have long been impressed with Essex's remarkable
investment performance and client service, which have resulted in
consistently strong growth. With an excellent management team, a diverse
client base, and a disciplined investment process which is employed across
numerous product offerings, Essex is exactly the kind of leading investment
management firm AMG seeks as an affiliate."
Mr. McNay said, "We were seeking a partner to help Essex with ownership
succession in a manner which provides for continued ownership in our firm for
current and future generations. Of the entities which have approached us over
the years, AMG offered the ideal combination of autonomy and retained
ownership which is best for Essex clients and employees."
AMG will purchase all of the outstanding stock of Essex in a merger
transaction, after which the business of Essex will be contributed to a new
limited liability company, Essex Investment Management Company, LLC. AMG will
pay $69.6 million in cash, in addition to approximately 1.75 million shares of
newly-issued AMG non-voting convertible stock, and will receive a 68%
interest in the successor firm. The stock will automatically convert into AMG
common stock on a 1:1 exchange ratio after one year. Essex's operations will
remain unchanged and current management, who will hold the remaining
ownership interest, will continue to oversee the operations of their firm. In
addition, certain key employees of Essex will sign long term employment
agreements with the firm.
Essex provides investment advisory services to defined benefit plans,
endowments, foundations,
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partnerships and private individuals. The firm believes that exhaustive
fundamental research, active portfolio management, and an investment culture
focused on identifying company earnings growth, profitability, and franchise
opportunities will achieve superior investment returns. Since its founding 22
years ago, Essex has successfully expanded its product offerings to apply
this discipline to Small Cap, Mid Cap, Large Cap, Hedge Funds, Venture
Capital, and Fixed Income portfolios. The firm's principals, analysts, and
portfolio managers have an average of 21 years of investment experience.
AMG was founded in December 1993 to address the succession and transition
issues facing the founders and owners of many mid-sized investment firms.
AMG's investment structure allows individual members of each affiliate's
management to retain or receive significant direct ownership in their firm
while maintaining operating autonomy. In addition, AMG provides centralized
assistance to its affiliates, when requested, in strategic matters,
marketing, product development and operations support. AMG's shareholders
include TA Associates, Chase Capital, NationsBank, and The Hartford, as well
as AMG management and the management of its affiliates. AMG's common stock is
listed on the NYSE under the symbol "AMG."
The transaction is expected to close upon receipt of customary approvals.
Certain matters discussed in this press release may constitute
forward-looking statements within the meaning of the federal securities laws.
Actual results and the timing of certain events could differ materially from
those projected in or contemplated by the forward-looking statements due to a
number of factors, including changes in the securities or financial markets
or in general economic conditions, the availability of equity and debt
financing, competition for acquisitions of interests in investment management
firms, and other risks detailed from time to time in AMG's filings with the
Securities and Exchange Commission ("SEC"). Reference is hereby made to the
"Risk Factors" set forth in the Prospectus dated November 20, 1997, included
as part of the Registration Statement on Form S-1 originally filed with the
SEC on August 29, 1997, as amended.
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EXHIBIT 99.2
Affiliated Managers Group, Inc. Completes Transaction
Essex Investment Management Company, LLC
BOSTON, March 20 /PRNewswire/ -- Affiliated Managers Group, Inc. (NYSE: AMG
- -news) announced today that is has closed its previously announced investment
in Essex Investment Management Company, LLC ("Essex"). Essex is a
Boston-based investment advisor which manages approximately $4.6 billion for
a variety of institutional and private clients. Founded by Joseph C. McNay,
Chairman and Chief Investment Officer, Essex specializes in investing in
growth equities and fixed income securities employing a fundamental
research-driven approach.
AMG is a Boston-based asset management holding company which acquires
majority interests in mid-sized investment management firms. AMG's strategy
is to generate growth through investments in new affiliates, as well as
through the internal growth of existing affiliated firms.
Essex becomes AMG's eleventh affiliate and the first since AMG's initial
public offering in November of 1997. Including Essex, AMG's affiliates
collectively manage over $50 billion. AMG's investment structure allows
individual members of each affiliate's management to retain or receive
significant direct ownership in their firm, while maintaining operating
autonomy. In addition, AMG provides assistance to its affiliates, when
requested, in areas such as marketing, distribution, product development and
operations support.
Certain matters discussed in this press release may constitute
forward-looking statements within the meaning of the federal securities laws.
Actual results and the timing of certain events could differ materially from
those projected in or contemplated by the forward-looking statements due to a
number of factors, including changes in the securities or financial markets
or in general economic conditions, the availability of equity and debt
financing, competition for acquisitions of interests in investment management
firms, and other risks detailed from time to time in AMG's filings with the
Securities and Exchange Commission ("SEC"). Reference is hereby made to the
"Risk Factors" set forth in the Prospectus dated November 20, 1997, included
as part of the Registration Statement on Form S-1 originally filed with the
SEC on August 29, 1997, as amended.
