BOSTON (Dow Jones) - Federated Investors Inc., a company known for money- market funds, said Friday it will pay up to $240 million to acquire MDT Advisers, which uses mathematical models to pick stocks.

Cambridge, Mass .-based MDT Advisers, a unit of MDTA LLC, manages about $7.1 billion . About $6.8 billion of that is in separately managed and institutional accounts. About $300 million is in mutual funds, which also use MDT's proprietary quantitative-investment process.

The deal includes initial purchase payments totaling about $110 million -- the majority of which will be paid at closing -- and a series of contingent payments totaling as much as $130 million over the next three years based on growth.

The transaction, approved by both Pittsburgh -based Federated's (FII) board of directors and MDTA LLC's shareholders, is expected to close in July. At closing, Federated would own about 90% of the outstanding equity interests of MDTA LLC, with the right to acquire the remaining 10% by June 30, 2007 .

"Combining the proven investment acumen of MDT's team and process with

Federated's distribution muscle will give our firm a powerful new growth opportunity," Federated Chief Executive J. Christopher Donahue said in a written statement.

He said the MDT mutual fund portfolios will "significantly enhance" Federated's product offerings by creating a quantitative line of equity funds to complement Federated's 39 existing equity mutual funds run using a process that blends quantitative and fundamental research.

Putnam Lovell NBF Securities Inc. served as financial adviser to MDTA LLC on the deal. Shares of Federated rose 34 cents, or more than 1%, to $32.48 in Friday afternoon trade. (END) Dow Jones Newswires 05-12-06 1435ET Copyright (c) 2006 Dow Jones & Company, Inc.