Asset Managers May Be Prowling For Deals

Asset management companies may be increasingly driven toward consolidation following BlackRock's (BLK Quote) deal to buy Barclays (BCS Quote) asset management unit Barclays Global Investors, according to a report from bond research firm CreditSights.

CreditSights analysts say declines in both stock and bond markets mean fewer assets to manage, meaning money managers may look to increase revenues through economies of scale.

Citing several press reports that Bank of New York Mellon (BK Quote) was interested in buying BGI, CreditSights assumes it will now be looking around at other potential acquisitions.

Legg Mason (LM Quote) ought to be at the top of Bank of New York's list, CreditSights argues, as it figures an acquisition could increase earnings by 15%.

State Street (STT Quote), Alliance Bernstein, Federated Investors (FII Quote) and Invesco (IVZ Quote) are other possibilities that would give Bank of New York's earnings a slight boost or hurt it only slightly in the short term, CreditSights writes.

Less attractive targets, though still possibilities, include SEI Investments Co. (SEIC Quote), Eaton Vance (EV Quote)and Janus Capital Group (JNS Quote), CreditSights writes.

Targets the analysts say "may not be appealing from a financial perspective," include T. Rowe Price (TROW Quote) and Franklin Resources (BEN Quote), as they would cause considerable earnings dilution.