Magellan Financial Group Ltd (ASX: MFG) shares are ending the week in style.
In morning trade, the fund manager's shares are up 6.5% to $9.64.
This even compares favourably to a booming S&P/ASX 200 Index (ASX: XJO), which is up 1.7% on Friday amid peace hopes in the Middle East.
Image source: Getty Images
Why are Magellan shares racing higher?
Investors have been buying the company's shares after it released a major update on its proposed merger with Barrenjoey.
According to the release, the Australian Competition and Consumer Commission (ACCC) has determined that the merger between Magellan Financial Group and Barrenjoey Capital Partners may be put into effect.
It notes that the determination is unconditional and subject to the expiry of the statutory 14-day review period.
The ACCC explained:
The ACCC has determined that the Acquisition may be put into effect as it considers that the Acquisition is unlikely to have the effect of substantially lessening competition in any market. In reaching its decision, and based on the material before it, the ACCC makes the following findings.
The Parties do not compete closely in the supply of asset management services in Australia as they focus on different asset classes and client types. The market share aggregation in the supply of asset management services in Australia resulting from the Acquisition is estimated to be low. The Parties would likely continue to face competition from alternative suppliers of asset management services in Australia.
As a result, Magellan expects to complete the merger in early July.
Name change
Subject to completion of the merger, the Magellan board revealed that it intends to seek shareholder approval to change the company's name from Magellan Financial Group Ltd to Barrenjoey Group Limited.
In addition, if approved, the company's ASX ticker will be changed from MFG to BJY.
Commenting on the news, Magellan's chair, Andrew Formica, said:
The ACCC's clearance is a significant milestone in the completion of the Merger and brings us one step closer in our shared ambition to build one of Australia's leading financial services businesses. MFG has built a recognised investment management franchise, supported by deep investment expertise and longstanding client relationships.
As we bring these two businesses together it is important that our brand reflects both the expanded capabilities of the combined Group and the opportunities ahead. The decision to adopt the Barrenjoey name recognises the transformational nature of the Merger and follows feedback from our clients, our people and our shareholders since announcement of the Merger. A unified brand will provide greater clarity while reflecting the innovative culture, alignment of interests and commitment to clients that will define the combined organisation.
