Invesco Ltd. agreed to buy the $ 5.7 billion OppenheimerFunds Inc. unit of Massachusetts Mutual Life Insurance Co., resulting in a series of acquisitions that turned the company into a $ 1 trillion asset management firm.
Invesco will pay MassMutual is the company's largest shareholder in its deal with 81.9 million common shares and another 4 billion dollars in preferred stock. Including the OppenheimerFunds, Invesco will manage more than $ 1.2 trillion in assets
Invesco chief Martin Flanagan has been contributing to a wave of consolidation over the last few years in an industry criticized for having too many executives The exchange-traded Funds from Guggenheim Partners are supported by a Robo consultancy.
The advent of exchange-traded funds and other low-cost options has put investment firms under pressure to lower their fees and seek new businesses. So-called passive investments, as well as or better than many of these funds offered by managers who select stocks and bonds, have been enforced at much lower cost.
The relocation has increased the pressure on active managers to offer new products, lower the fees charged to investors, and in some cases unite with their competitors.
Yet, many executives are still dissatisfied deal makers, knowing that the stock market rally has raised the price of potential acquisitions. Others fear that possible deals would accelerate the outflow of client funds.
"The world has changed and is moving fast," Mr. Flanagan said on Thursday in an interview. "We hope the good old days will come back ̵
The acquisition strengthens Invesco's position in some companies that have proven resilient to passive investments, including international and emerging market funds, Mr. Flanagan said.
OppenheimerFunds also has a strong US distribution organization that will work well with Invesco's overseas sales teams.
MassMutual does not want to get out of the asset management business, Chief Executive Roger Crandall told The Wall Street Journal. The deal offered the insurer the chance to hold a large stake in a much larger company. Buying another company would have proved too costly, he said.
One way Invesco can benefit from the deal is to buy MassMutual
"Sales force of about 4,000 agents in 2016 will increase its total fleet to around 9,000." Large-volume life insurance agents are typically licensed to sell mutual funds and variable annuities.
Invesco announced a third-quarter profit for the third quarter $ 269.6 million, or 65 cents per share, a slight increase of $ 267.5 million, or 65 cents per share, from the previous year, with total revenue up 1% to $ 966.9 million  Analysts surveyed by FactSet forecast earnings of 67 cents per share on revenue of $ 971.4 million.
The Atlanta-based asset manager also announced a $ 1.2 billion share repurchase program over the next two years
-Nick Kostov and Leslie Scism contributed to this article.
Write to Justin Baer at justin.baer@wsj. com