Business as usual at Threadneedle following sale agreement

The Threadneedle organisation will retain its name and will continue to be led by Simon Davies, Threadneedle CEO, and the existing management team.

Threadneedle’s hedge fund business, which was set up in 2000 with the launch of the Crescendo European Fund, will also continue using the same brand and product names.

Hitesh Bharkhda will continue to head the hedge fund business, which now has three Cayman-domiciled products, including Crescendo UK, which was launched in 2001 and Crescendo Credit, which was launched three months ago.

Crescendo Credit already has US$40 million under management and Threadneedle will soft close the fund at US$150 million.

Jim Cracchiolo, Group President, Global Financial Services and Chairman and Chief Executive Officer, American Express Financial Advisors, said: "The decision to acquire Threadneedle is part of our overall strategy to expand our financial services business globally."

Mr Cracchiolo said: "Threadneedle complements the American Express Financial Advisors business, which provides financial planning and advice to more than 2 million US clients, and American Express Bank, which operates in 42 countries and provides mainly private and retail banking services.  We see tremendous potential for long-term growth in the European asset management market, and by adding Threadneedle to our global asset management businesses American Express will be well-positioned to capitalise on this opportunity."
He added: ""Threadneedle brings to American Express a truly outstanding track record of investment performance, complementing American Express’ own recent improvement in investment performance in the US. Going forward, we plan to leverage Threadneedle’s core strengths in asset management for the benefit of all our clients – both American Express’ and Threadneedle’s."

The sale of Threadneedle by Its parent Zurich Financial Services Group, which is subject to regulatory approvals, is expected to close in the last quarter of the year.  The transaction has been valued at approximately US$570 million and will be paid in cash on completion.

Threadneedle is one of the premier asset management organisations in the UK, with more than US$75 billion in assets under management.  Founded in 1994, Threadneedle manages assets for insurance companies, private investors, corporations, investment funds, pension plans and Zurich affiliate group companies.  It is the second largest retail investment funds manager and the ninth largest segregated pension fund manager in the UK by assets under management.  Threadneedle also operates in Germany and other European markets.
Threadneedle will continue to manage certain assets for Zurich Financial Services UK, which comprise a substantial portion of Threadneedle’s assets under management, for an initial term of up to eight years, subject to standard performance criteria.  It will also maintain its close working relationship with Zurich’s UK distribution network, which will continue to have access to Threadneedle investment products and services.

The transaction is expected to have no material impact on American Express Company’s earnings per share in 2003.  It is expected to be slightly accretive to EPS in 2004 with additional benefits expected in future years.