10 October 2016

Henderson Group agrees merger with rival Janus Capital

 UK-based asset management giant Henderson Group last week made an offer to acquire New York Stock Exchange-listed Janus Capital. As consideration, the buyer will issue 5 new shares in exchange for each share in the target. The deal is worth around USD 2,615 million and the offer price carries an estimated value of USD 14, representing a 2 per cent premium over Janus Capital’s closing price on 30th September, the last trading day prior to the announcement. According to Zephyr, the M&A database published by Bureau van Dijk, the acquisition is set to be the purchaser’s largest to date.

Pending the go-ahead from shareholders and regulators, including the Financial Industry Regulatory Authority and Financial Conduct Authority, the board-approved takeover is expected to close in June next year. Under the terms of the agreement, London Stock Exchange-listed Henderson Group will hold a 57 per cent interest in the merged entity, while Janus Capital will own the remaining stake.  

The Wall Street Journal reported that the deal reflects the pressure faced by active asset managers as investors are moving their money to passively managed funds (which charge lower management fees, resulting in better returns). According to the newspaper, the net withdrawal from Henderson Group’s funds amounted to GBP 2,000 million in the first half of 2016, while Janus Capital had net outflows of USD 300 million during the same period.

Since Henderson Group and Janus Capital’s businesses are based in different markets, the deal will allow both companies to conveniently expand their geographic presence, as well as to create economies of scale, which is expected to cut USD 110 million in costs annually. Commenting on the deal, Dick Weil, chief executive of Janus Capital stated: “This is a transformational combination for both organisations. Janus brings a strong platform in the US and Japanese markets, which is complemented by Henderson's strength in the UK and European markets. Furthermore, the Economist reported that with a combined USD 320 billion in assets under management, the merged entity is set to be among the 60 largest fund managers globally (Janus Capital currently ranks 90th, while Henderson Group is ranked 116th, according to consultancy firm Willis Towers Watson.)

Following the announcement, Janus Capital’s share price surged 12 per cent to close at USD 16, while Henderson Group’s equity was up 17 per cent from the previous trading day, reflecting investors’ optimism in the deal. 

Janus Capital has appointed Loeb Partners as a financial advisor to the deal, while Bank of America and Centerview Partners are assisting Henderson Group.

© Zephyr