AMG to Buy 51% of Friess Associates

Consolidation is continuing in the money management business, despite--or perhaps because of--ongoing weakness in the stock market.

The latest deal: Boston-based Affiliated Managers Group Inc. agreed Wednesday to buy 51% of Friess Associates, advisor to the Brandywine Funds, for $247 million in cash.

AMG said it plans to increase its stake in Greenville, Del.-based Friess by another 19% in three years. The remaining 30% will be held by Foster Friess, the firm’s founder, and by other Friess employees.

AMG is buying Friess to expand its lineup of asset managers and boost its mutual fund business, which includes such firms as Tweedy Browne and First Quadrant.

“We are interested in the mutual fund area and the retail area generally, and this increases our exposure in a way we think makes us quite balanced,” said AMG President Sean M. Healey.

The acquisition of majority stakes in Friess and in Boston-based Welch & Forbes Inc., the latter announced July 31, will mean 62% of AMG’s earnings will come from mutual funds and from high-net-worth investors, Healey said. AMG had $74 billion under management at the end of June.

Friess, known for picking stocks of rapidly growing companies he thinks are reasonably priced, has been seeking a strategic investor to allow him to shift some equity to employees, add expertise and permit him to keep a significant stake, he said.

Friess Associates, founded in 1974, manages $7.1 billion in all.

AMG’s stock (ticker symbol: AMG) has been a strong performer this year. It’s up 23% since Dec. 31, including Wednesday’s gain of $1.16 to $67.30 on the New York Stock Exchange.

Among other mutual fund companies, shares of T. Rowe Price (TROW) are down 10% this year, and Franklin Resources (BEN) is up 8.7%.