UNITED STATES - Callan Associates, the San Francisco-headquartered consultant to major investors such as US pension funds, is being bought by rival firm Mercer to create one of the largest investment consulting businesses in the US.
Terms of the deal have not been disclosed but officials say they see the purchase as a merger of two companies with similar cultures, strategies, market shares and staff numbers, in a bid to build a bigger market share within a "fragmented" US market.
Andrew Kirton, global head of investment consulting at Mercer, said the rationale is to bringing together the two organisations to "broaden the capabilities" and create a US company of approximately 400 people.
"It is not about buying clients and assets, it is very much about strengthening our market presence and the depth of intellectual capital," said Kirton.
Callan is best known for its work with US pension funds and public organisations, including the likes of Orange County, the Massachussettes Pensions Reserve Investment Board, the Florida State Board of Administration and Illinois Teachers, and currently offers five services: fund sponsor consulting, investment advice, institutional consulting, alongside its Callan Investments Institute - similar to Mercer's multi-manager and research operation - and Trust Advisory Group.
The acquisition is expected to be completed by the end of Q1 2009, and work is then likely to begin to merge the teams most US offices.
While Callan's San Francisco base will remain as a key base, Kirton said it is likely all other US Mercer and Callan offices - in Atlanta, Denver, Chicago and Florham Park, New Jersey - will be rationalised because both firms have offices in similar locations.
Callan currently employs around 170 people but there is no indication of job losses following the takeover, as Kirton stressed there is a desire to retain the senior management and "maintain pretty much the same teams" but bring them together.
"I would expect us to employ more [people] over the next 12-24 months. We certainly hope that they would feel comfortable within the combined operations," said Kirton.
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