TORONTO - Guardian Capital Group Limited (TSX:GCG) (TSX:GCG.A), a global investment management firm, has announced the acquisition of Sterling Capital Management LLC from Truist Financial Corporation (NYSE: NYSE:TFC), marking a significant expansion of Guardian's asset management business. The transaction, which involves Guardian's subsidiary Guardian Capital LLC purchasing Sterling for US$70 million, is expected to close in Q2, 2024, subject to customary approvals.
Sterling, an independent investment manager since 1970 and based in Charlotte, North Carolina, manages approximately US$76 billion in assets. The acquisition will enhance Guardian's scale as a global asset manager and expand its platform for future growth, according to George Mavroudis, President and CEO of Guardian.
Mavroudis expressed enthusiasm for the alignment of Sterling's pursuit of excellence with Guardian's commitment to investment quality and innovation. "Sterling shares and complements our approach and values in addition to adding new capabilities and investment strategies that enhance our offering in the United States," he said
Post-acquisition, Sterling will operate independently within the Guardian group, maintaining its management and professional team to ensure continuity for clients. Scott Haenni, CEO of Sterling, welcomed the new chapter and anticipated opportunities for growth under Guardian's strategic oversight, while continuing to collaborate with Truist.
The financial terms include a purchase price of US$70 million with additional future earn-out incentives. As of September 30, 2023, Guardian managed C$56.2 billion in client assets and had a proprietary investment portfolio valued at C$1.28 billion.
This information in this article is based on a press release statement.
InvestingPro Insights
As Guardian Capital Group Limited (GCG) embarks on this strategic acquisition of Sterling Capital Management, it's important for investors to consider the financial health and market performance of GCG. According to real-time data from InvestingPro, GCG boasts a Price/Earnings (P/E) Ratio of 10.88, indicating a potentially attractive valuation relative to earnings. The company's PEG Ratio, which stands at 0.74, suggests that the stock may be undervalued based on expected growth rates. Moreover, the Price/Book (P/B) Ratio of 1.04 could signal that the market is pricing the company's assets reasonably.
InvestingPro Tips highlight that Guardian's stock typically experiences low price volatility and has seen a price increase of 25.41% over the last year, reflecting a strong period for the stock. However, it's important to note that the company has not been profitable over the last twelve months and struggles with weak gross profit margins of 29.72%. Additionally, Guardian's stock price often moves counter to the market, which could be a consideration for investors seeking to diversify their portfolios.
Guardian's acquisition of Sterling could potentially address some of these concerns by expanding its asset management business and providing opportunities for future growth. Investors interested in further insights can find additional InvestingPro Tips for GCG at https://www.investing.com/pro/GCG. Currently, there are 9 additional tips available, which can be accessed with an InvestingPro+ subscription now on a special New Year sale with up to a 50% discount. Use coupon code SFY24 to get an additional 10% off a 2-year subscription, or SFY241 to get an additional 10% off a 1-year subscription.
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