May 31, 2023

kanawatvector/iStock via Getty Images Great-West Lifeco ( OTCPK:GWLIF ) agreed on Wednesday to sell Putnam Investments to Franklin Resources (NYSE: BEN ) for as much as ~US$1.4B, allowing it to focus on Lifeco's U.S. strategy on retirement and personal wealth and giving it a 4.9% stake in Franklin Templeton. For Franklin Resources ( BEN ), the deal expands its retirement sector business and increases Franklin Templeton's defined contribution assets under management to ~$90B. Franklin Templeton, Great-West Lifeco ( OTCPK:GWLIF ) and Power Corp. of Canada ( OTCPK:PWCDF ) have entered into a partnership to distribute Franklin Templeton products. Lifeco will provide an initial long-term asset allocation amount of US$25B AUM to Franklin Templeton within 12 months of closing. "The strategic partnership aligns with Franklin Templeton’s focus to further grow insurance client assets, and significantly broadens the relationship between Franklin Templeton and the Power Group of Companies in key areas of retirement, asset management and wealth management," Franklin Resources said. Franklin Templeton ( BEN ) will pay an upfront consideration of US$950M-US$1.0B, consisting of 33.33M BEN shares at closing and US$100M of cash in six months after the closing, and up to $375M of payments tied to revenue growth targets between three and seven years after the close. Franklin Resources ( BEN ) expects the deal to be "modestly accretive" to run-rate adjusted EPS by the end of the first year after closing. Lifeco ( OTCPK:GWLIF ) will keep PanAgora, its quantitative asset manager, and realize the value of Putnam's seed capital, which, together with closing adjustments are estimated to be worth US$375M-US$425M. Lifeco will also retain some deferred tax assets related to Putnam. The transaction is expected to close in Q4 2023. Lifeco ( OTCPK:GWLIF ) has agreed to keep the shares, representing ~4.9% of outstanding Franklin Templeton stock for at least five years. It will hold an ~6.2% stake in Franklin Resources ( BEN ). Lifeco will hold a conference call at 10:00 AM ET.