Waddell & Reed cuts more than 200 jobs as downtown KC tower remains under construction
Waddell & Reed will lay off more than 200 employees, raising more questions about the firm’s future in downtown Kansas City.
The job cuts are part of a merger agreement with Australia’s Macquarie Group. In December, Macquarie Asset Management announced plans to acquire all of the outstanding shares of Overland Park’s Waddell & Reed for $25 per share in cash in a deal valued at $1.7 billion.
Macquarie plans to sell off Waddell & Reed’s wealth management platform to LPL Financial Holdings Inc., an independent broker-dealer in Boston, for $300 million.
A notice filed with Kansas regulators last week shows the company plans to cut 219 positions in Overland Park beginning April 30, when the acquisition is expected to close. Those layoffs will only occur if the sale is completed.
Waddell & Reed said affected employees have been or will be notified at least 60 days before their terminations. A company spokesperson said affected employees will be eligible for “comprehensive financial and non-financial severance benefits,” including continued subsidized healthcare and outplacement services to assist in finding new jobs.
“Macquarie, Waddell & Reed and LPL are committed to taking a very careful and thoughtful approach in bringing together the capabilities and resources needed to help advisors, intermediary partners, and their clients achieve their investment objectives while delivering exceptional service,” the company said in a statement Tuesday.
Mergers always raise the possibility of layoffs as companies seek to realize potential cost savings from combining operations. But Waddell & Reed’s comes as the firm planned to relocate its headquarters from Johnson County to downtown Kansas City.
In 2019, it proposed moving into a new $140 million tower that promised to reshape the skyline. Construction is well underway on an 18-story tower at 14th Street and Baltimore Avenue. It includes a 10-floor, 913-space parking garage and eight floors of office space.
Last December, a divided City Council approved $35 million in local incentives in the form of a six-year, 75% tax abatement followed by nine years at 37.5%, a sales tax exemption on construction materials and a redirection to the company of earnings and utility taxes.
The company also won up to $62 million in incentives from Missouri for relocating jobs to the state. Collectively, those incentives cover more than 70% of the costs of the building.
But the incentives are tied directly to the number of Waddell & Reed employees working at the site. If the company doesn’t move in — or if it doesn’t add the 900-plus jobs it promised — the city and state will not distribute those funds.
Waddell & Reed had planned to lease the new 260,000-square-foot tower from its developer. An attorney previously said the firm would pay a rent of at least $40 per square foot — well above the norm for downtown or any part of the metro. That means Waddell & Reed could be on the hook for more than $10 million in annual rent.
In a Feb. 19 filing with the Securities and Exchange Commission, Waddell & Reed said it had not determined what impact the merger would have on its lease agreement for the downtown tower.
The lease agreement was signed in January 2020. But the company says the merger agreement limits its ability to take certain actions like spending to relocate operations while the deal is pending.
The company signed a 15-year lease on its new tower, which is owned by a firm called 1400 Baltimore Owner LLC. Jackson County property records list executives from various companies controlled by Financial Holdings Corp. as being involved with 1400 Baltimore Owner LLC. Financial Holdings is an umbrella firm of companies controlled by the Merriman family, including the Americo Life insurance firm.
Kansas City-based Burns & McDonnell was contracted for exterior design and construction of Waddell & Reed’s new tower, with HOK working on interior design.
City leaders previously assured that construction on the tower would move forward regardless of Waddell & Reed’s fate.
But the financing of the building was designed around Waddell & Reed. Documentation of a $103 million construction loan from JPMorgan Chase to the developer references the lease agreement with Waddell & Reed. And the more than $62 million awarded by the Missouri Department of Economic Development was predicated on the firm bringing at least 1,039 workers to Kansas City at an average total annual compensation of more than $157,000.
This story was originally published March 2, 2021 at 11:53 AM.
