Fund manager Henderson Group plc in US$6 billion merger – Shares set to soar

What: After the close of Monday’s trading session on the ASX, UK-based global fund manager Henderson Group plc (ASX: HGG) announced that it had reached an agreement with the US-based Janus Capital Group Inc to merge.

The merger will take the form of an all-stock merger of equals. Assuming the proposal passes all necessary hurdles, on completion Janus shareholders will hold approximately 57% of the combined entity, Henderson’s shareholders will hold 43%.

Janus is a well-known asset manager with around US$195 billion in assets under management (AUM). The group has received an elevated profile in the recent past since Mr Bill “The Bond King” Gross joined the company.

So What: The merger is being touted as an opportunity to combine Janus’ strength in the US markets with Henderson Group’s strength in the UK and European markets.

The merger has been described as an opportunity “to create a truly global asset manager with a diverse geographic footprint which closely matches the global fund management industry.”

According to management, this global footprint will allow for improved distribution of investment products and a stronger business with operations in 29 locations around the globe.

On completion, combined total assets under management will be over US$320 billion with revenue of over US$2.2 billion and earnings before interest, tax, depreciation and amortisation of over US$700 million.

The merger is also expected to achieve significant cost synergies with over US$110 million in annualised costs expected to be removed.

Now What: Henderson Group has had an interesting past with the group originally being acquired and then spun out of AMP Limited (ASX: AMP). The group also undertook a dual listing whereby it was not only listed on the ASX but also on the London Stock Exchange (LSE).

Interestingly, its LSE listing looks set to end with the merger announcement stating that the new Janus-Henderson entity would apply for admission to the NYSE (where Janus is currently listed) while retaining its ASX listing.

In trading overnight on the LSE, Henderson Group’s shares surged nearly 17% in response to the announcement.

That reaction sets a positive stance for trading in the group’s shares when the ASX opens on Tuesday morning. In early trading, the share price was up 12.8% to $4.49.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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