Franklin Resources: Distribution Deal With Great-West Could Be More Valuable to Franklin Than Putnam

While we had expected to lower our fair value estimate for narrow-moat-rated Franklin Resources following the firm's announcement that it was acquiring Putnam Investments from Canadian life insurer Great-West Lifeco for $925 million (composed of 33.3 million shares of its common stock when the deal closes and another $100 million in cash six months after the transaction closes), as well as potentially $375 million more in cash between three to seven years after the deal is consummated if certain growth targets are met, there was relatively little change to our valuation once we input all the specifics of, as well as the potential benefits from, the transaction into our model.