Madison Dearborn in deal for Nuveen

Asset manager Nuveen Investments Inc. said Wednesday that it had agreed to be acquired by a group led by private equity firm Madison Dearborn Partners for $5.42 billion in cash.

The deal between the two Chicago companies is the latest example of a trend of private equity firms’ scooping up asset management firms.

Madison Dearborn agreed to pay $65 a share for Nuveen -- a 20% premium over its closing stock price Tuesday. Shares of Nuveen on Wednesday jumped $8.98, or 17%, to $63.14.

The buyers also would assume debt of $550 million.

Nuveen, a 109-year-old company with more than $165 billion in assets under management, has shifted in recent years from being a municipal bond specialist to investing in stocks and operating closed-end mutual funds. The company said the sale would enable it to develop new investment products.

Timothy Hurd, a managing director for Madison Dearborn, said in a statement that his firm could give Nuveen the flexibility and resources to “sustain a very positive environment for high-performing professionals to excel and prosper.”

Under the buyout pact, Nuveen can solicit competing bids until July 19, and the firm said its board intended to do so.