Franklin Resources to Buy Fiduciary Trust

Mutual fund giant Franklin Resources Inc., mentioned frequently in recent months as a potential takeover target, turned buyer on Wednesday: The company said it agreed to acquire Fiduciary Trust Co. International of New York for $825 million in stock.

The deal is the latest in a wave of consolidation that has swept the fund industry this year.

San Mateo, Calif.-based Franklin, parent of the Franklin Templeton funds, said adding Fiduciary Trust will strengthen its ties to institutional investors and bring in more business from financial advisors and the rich. Franklin manages $230 billion in assets while Fiduciary Trust, founded in 1931, manages $50 billion.

Each share of Fiduciary Trust will be swapped for Franklin shares worth $113.38, provided Franklin’s average closing price just before the deal is completed remains between $34.68 and $42.38.

Fiduciary Trust’s shares, traded on the Nasdaq Bulletin Board, soared $39 to $104. Franklin shares (BEN) eased 69 cents to $39.71 on the New York Stock Exchange.

Franklin has been rumored to be in merger talks with German insurance giant Allianz. But Wednesday, Franklin CEO Charles Johnson insisted the company isn’t on the auction block.

“I think this deal says, with an exclamation point, that we intend to stay independent,” Johnson said.