Henderson (HGG) has announced an all-share merger with US fund manager Janus Capital Group, adding scale and boosting the UK-listed group's US exposure. Henderson chief executive Andrew Formica and his Janus Capital equivalent, Dick Weil, will become co-chief executives of the combined entity Janus Henderson Global Investors. The group will be headquartered in London, but Henderson will no longer be listed here. The combined group will apply to trade in New York as its primary listing, while Henderson will retain place on the Australian market.
Management expects the deal - which should complete by the second quarter of 2017 - to generate annual net cost synergies of at least $110m (£86m), which will be fully realised three years after it completes. It also expects a double-digit increase in earnings per share for both companies in the 12 months following completion, after excluding one-off costs.
Shareholders in Henderson will own 57 per cent of Janus Henderson, with the remainder attributable to Janus Capital shareholders. Meanwhile Janus's largest shareholder, Dai-ichi Life Insurance Company, plans to invest more in the combined group to increase its shareholding to 15 per cent.
The deal will form a more geographically balanced fund manager (see chart). Janus Henderson will have assets under management of more than $320bn, the majority belonging to retail investors. Janus had $195bn in assets under management at the end of June, split between equities, fixed income and exchange traded products. However, the US group has been increasing its fixed income assets, which account for a quarter of assets under management from just 5 per cent in 2009. At the same time, it has reduced its equity offerings to just fewer than three-quarters of assets under management, from 95 per cent.
Henderson suffered a surge in outflows in the run-up to the EU referendum, which only increased once the UK voted to leave. The group incurred £2bn in net outflows during the six months to the end of June, although overall assets under management rose 3 per cent thanks to beneficial foreign exchange movements. Assets invested in Europe, the Middle East and Africa will account for a third of the new group's total, reducing the effects of further post-referendum volatility.
