Teton Advisors has agreed to acquire Keeley Asset Management, a privately owned Chicago-based asset management firm, for an undisclosed sum.

Keeley was set up in 1982 by John Keeley, Jr., and managed nearly $2.5bn in assets as at 30 September 2016.

The combined group will have $4bn in assets under management, and will maintain staffing and operations in Chicago.

Keeley will become a wholly owned subsidiary of Teton and rebranded as Keeley Teton Advisors, following completion of the deal in the first quarter of 2017.

Teton CEO Nicholas Galluccio said: "For Teton, this is a transformational combination of two well-established, active asset managers into a preeminent investment firm. The combination will leverage the resources of both firms to the benefit of fund shareholders, clients and stakeholders."

The deal is subject to regulatory and shareholder approvals. Kevin Keeley will assume the role of executive chairman of the combined entity upon deal completion.