A little after one year since City fund manager Gartmore went public, the troubled asset manager is set to be acquired by Anglo-Australian fund house the Henderson Group.
The deal has been finalised on an equity swap basis, meaning every shareholder of Gartmore will receive two Henderson shares in exchange for three Gartmore shares they tender. Based on Henderson’s closing price of 138.2 pence per share on Monday, the deal values Gartmore shares at 92.1 pence each. Gartmore’s shares closed at 90.6 pence on Tuesday and Henderson’s price indicates a small premium of 1.5 pence.
Announcing the deal on Wednesday, Henderson Chief Executive Andrew Formica said: “By bringing across fund managers and integrating the business on to our own platform we will be able to enhance margins significantly”.
The merger is set to create one of Britain’s biggest retail asset management companies with total asset under management estimated at £78.1 billion, as on December 31, 2010. Henderson alone manages £61.6 billion.
If the deal is approved by the shareholders and regulators, the Financial Service Authority will grant Henderson an investment firm consolidation waiver, valid till 2016.
Both the company’s boards have agreed to recommend the deal to respective shareholders. Gartmore managers who collectively manage 84 percent of the funds have agreed to support the deal, dispelling fears of them refusing to work under new management.
Hellman Friedman, a private equity investor holding 23.6 percent of Gartmore’s shares, will reduce its holding to 4.6 percent, after the deal.
Henderson said it has received irrevocable undertaking from 60 percent Gartmore shareholders supporting the bid. Gartmore shareholders will own 22.5 percent shares of the combined entity.