Shares in asset manager Henderson (HGG) are up 12% at 260p after it agreed to merge with US asset manager Janus Capital (JNS:NYSE), a business best known for its recruitment of ‘bond king’ Bill Gross after his departure from Pimco.
Gross, who founded Pimco and helped it become the world’s largest manager of bonds, is now portfolio manager of Janus Capital’s $1.5bn (£1.2bn) unconstrained bond fund and is reported to be supportive of the deal.
Henderson’s merger with Janus will create a business with $320 billion of assets under management (AuM) worth around $6 billion in total.
As well as increased size, the combined fund management group will boast greater breadth, with strong market positions in the UK, Europe and US.
Cost savings from combining the two companies, through the removal of overlapping functions and items like rent, IT, legal and professional costs, should deliver a $180 million reduction in costs. Overall, the deal is expected to increase both companies’ earnings per share ‘in the double digits’, excluding one-off costs, in the first 12 months following completion.
Pro-forma underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for the combined business is around $700 million.
Current chief executive officers (CEOs) Andrew Formica at Henderson and Dick Weil at Janus will continue to run the business in a joint CEO role.
The deal has the support of Henderson’s biggest shareholder, Japan-headquartered life insurer Dai-ichi Life Insurance (TYO:8750).
Henderson shareholders will own 57% of the combined business with Janus shareholders taking the remainder.
The combined business is planning to scrap its UK listing and will be quoted on the US and Australian exchanges when the deal completes.
A spokesperson for the company said Henderson’s shareholder base is split 60:40 in favour of Australia versus the UK while most of Janus’ shareholders are US-based, meaning that maintaining listings in the US and Australia made the most sense.