By Kevin Collison
Waddell & Reed has been sold to an Australian global financial firm, casting a big shadow over its plans to relocate its headquarters to a $148 million downtown tower under construction that was approved for tax incentives only a year ago.
The Overland Park-based firm announced late Wednesday it has entered into a merger agreement with the Macquarie Group in a $1.7 billion deal in which Macquarie will acquire all Waddell’s outstanding shares, according to a press release.
In its initial response about the headquarters project, Waddell & Reed, which was founded in downtown Kansas City in 1937, was noncommittal about how the transaction would affect the 18-story tower now well underway at 14th and Baltimore.
“Waddell & Reed Financial and Macquarie are mindful of the building project in downtown Kansas City and completely appreciate the potential impacts the transaction may have on the community,” Roger Hoadley, vice president of communications, said in an email.
“We will be working with all the appropriate parties and reviewing plans closely, carefully and collaboratively and will provide updates over the coming weeks and months.”
According to the terms of the acquisition deal, on completion of the transaction, Macquarie has agreed to sell Waddell & Reed Financial, Inc.’s wealth management platform to LPL Financial Holdings Inc.
“Waddell & Reed advisors are highly experienced and well-respected throughout the industry. They are a terrific fit both culturally and strategically, and we welcome them to the LPL family,” Dan Arnold, president and CEO of LPL Financial, said in a statement.
Waddell & Reed was founded in Kansas City in 1937 by Chauncey Waddell and Cameron Reed, two World War I veterans. Its original office was in the New York Life building at Ninth and Baltimore.
The firm has grown over the decades to become one of the nation’s largest financial services businesses.
Waddell & Reed Financial, Inc.’s asset management business had $68 billion of assets under management and its wealth management business had assets under administration of $63 billion as of Sept. 30, according to the press release.
The firm’s quest for a new headquarters, it’s currently located in Overland Park, dominated the downtown conversation over the past 14 months.
The news Waddell & Reed was considering downtown for its 1,000-employee headquarters first surfaced in October 2019. The firm chose a site at the southwest corner of 14th and Baltimore for its headquarters in December of last year.
It signed a 15-year lease in January with a development team comprised of Burns & McDonnell and Financial Holding Corp., an entity controlled by Michael Merriman, who’s father, Joe Jack Merriman, was president of Waddell & Reed in the late 1960s.
Landing the headquarters project and its well-paid employees was considered a major coup for downtown.
While the area has been resurged in recent years with thousands of new residents and entertainment venues, it had not been successful landing new jobs.
At the urging of downtown business interests, including the Downtown Council, the City Council approved a six-year property tax abatement at 75 percent and nine years at 37.5 percent on an 8-4 vote last December, a roughly $24 million incentive package.
The state also is providing a $62 million job incentive package to Waddell & Reed.
Approval of the building’s design proved even more divisive.
The tower will be eight stories of office space atop at 10-story, 913-space garage. The lobby itself will be on the 10th floor accessed by either the garage or an elevator lobby at ground level.
Complaints about its lack of street-level appeal prompted the architect to add a small amount of retail space at one corner, but the final 7-6 vote last April approving the design was only decided by Mayor Quinton Lucas.
In breaking the tie, the mayor said said he didn’t want to risk losing a $148 million development that would bring 1,000 jobs downtown.
Construction began shortly after the Council vote last spring and the project is well underway.
In a statement about the transaction, Philip J. Sanders, CEO of Waddell & Reed Financial said:
“Over the past few years, we have been focused on leveraging our strong heritage as the foundation for transforming our firm into a more diversified and growth-oriented financial services enterprise.
“The long-term partnership between Macquarie and LPL as part of this transaction accelerates that transformation and ultimately will benefit our clients and independent financial advisors while delivering significant value to our stockholders.”
The subject of its headquarters under construction in downtown Kansas City did not come up in the release announcing the deal.
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Interesting. I wouldn’t think a $1.7 billion buyout happens within the span of a few months, so surely the people making decisions at W&R knew it might be happening before committing to and starting construction. That being said, presumably the deal won’t impact the existing development plans? I also have zero knowledge of the details behind this so… grain of salt.
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