The asset management company, Henderson Group (LON:HGG), has arrived at a friendly merger deal with Janus Capital. Janus is based out of Denver, Colorado in the United States, while the Henderson Group is headquartered at London in the UK.
Andrew Formica, the Chief Executive of Henderson, revealed that the new group will be named Janus Henderson Global Investors. They will be managing assets worth $416.71 billion. The market valuation is likely to be $6 billion at least, according to a joint statement issued by both the firms. In the new agreement, Dai-ichi Life Holdings of Japan, the biggest shareholder of Janus, will have 9 percent stake. However, there are plans to increase their stake to 15 percent soon.
This new company is going to be listed in the US. Both Andrew and Dick Weil, the boss of Janus, will be the co-chief executives of this new venture.
Helps the New Business Stave Off Competition
The merger decision is a significant move, as both the companies have been facing rising competition in recent times. The merger is likely to help them boost business profits. There could be some cost cutting too after the deal as the new company might want to focus on growth areas to become more competitive.
The stock market responded positively to this move. Henderson’s stock was up by 20.2 percent, it’s highest since 2009. The Henderson stock was in high demand on Monday as well. It soared 18.22 percent to reach 274.27 GBX before profit taking brought it down somewhat.
What the Investors Will Get
Janus investors are going to get 4.719 stocks of Henderson (LON:HGG) for each share they have. Henderson investors, on the other hand, will have 57 percent of this new firm. The deal will likely be finalized in the second quarter of 2017.
Andrew revealed that they have been talking about the merger since February this year. “We have been talking a lot since then”, he says. A lot of investors have pulled their money out from the UK after the Brexit vote. Andrew, however, revealed that “Brexit didn’t accelerate the deal, nor did it have any impact”.
The deal is likely to help them save a minimum of $110 million a year. Formica says that the effect of passive investing and regulatory changes always have an impact on the margins. We can achieve scale by going more global.