The companies said the $12.3 billion Putnam Prime Money Market Fund was liquidated after 5 p.m. Wednesday and its institutional shareholders received shares of Federated Prime Obligations Fund on a $1-per-share for $1-per-share basis.  

Federated Prime Obligations Fund, which had $22.1 billion in assets as of September 22, 2008, “is designed for use by fiduciaries and other institutional investors who have rigorous requirements for safety and daily liquidity at par,” a press release noted.

This action follows Putnam’s September. 18, 2008 announcement that the Board of Trustees of the Putnam Funds, in response to market conditions, had voted to close the Putnam Prime Money Market Fund, effective 5:00 p.m. on Sept. 17, 2008 and to liquidate the fund. (See  Market Turmoil Sparks Putnam Fund Shuttering )

Shareholders of Putnam Prime Money Market Fund will be entitled to dividends through September 24, 2008, the announcement said. The accumulated, but unpaid, dividends will be paid on September 25, 2008 by Putnam.   Such shareholders will be entitled to dividends from Federated Prime Obligations Fund beginning September 25, 2008.

“We believe this transaction with Federated is very beneficial to the shareholders of the Putnam Prime Money Market Fund,” said Robert L. Reynolds, Putnam president and chief executive officer, in the release.   “First, we wanted to be fair and equitable to all shareholders, which is why we closed the fund.   Second, in liquidation, we were looking for the best solution possible.   The transaction with Federated accomplishes this objective.”