The deal, subject to regulatory approval, could see a combined cost saving of $110 million.
U.S. based Janus Capital and London-listed Henderson Global Investors, former rivals, have decided to stop bickering and instead collaborate to form a $6 billion company which will not only improve their combined global reach but also streamline their expenses.
With the news of this merger hitting the market, Janus’s shares soared by 16% in morning trade on the NY Stock exchange. Both companies have said the deal could boost their combined earnings by 10%.
The combined company would have $320 billion assets under its management and thus get a place in the top 50 global asset manager’s list.
“There is very little overlap between the two companies with (Janus) having a strong presence in the U.S. and Japan and Henderson having a strong presence in the UK and Continental Europe,” said Christopher Harris, an analyst at Wells Fargo Securities, in a research note.
The merger comes midst small and mid-sized players in the industry looking to gain scale, diversify and streamline their operations so as to protect the widespread pressure on their fees and margins.
“The combined product line-up will be much more balanced and diverse,” said Andrew Formica, Henderson CEO. He went on to add that while Henderson had a strong foothold in the European and British market, Janus has a strong presence in Japan and in the United States.
The merger, subject to regulatory approval, is expected to close by the end of the second quarter in 2017. After the merger, Henderson and Janus shareholders are likely to own 57% and 43%, respectively.
Janus CEO, Dick Weil, will be the CEO of the combined entity.
In a statement both companies stated that each Janus share will be exchanged for 4.719 shares in Henderson.
“We see this as a positive move with complementary asset bases and a very material cost synergy figure,” said Paul McGinnis, an analyst at Shore Capital, in a note to clients.
According to Henderson’s Chief Financial Officer, Roger Thompson, the merger will result in a cost saving of at least $110 million, which represents nearly 10% of the combined group’s cost base.