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Henderson clinches New Star with GBP115m acquisition

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Henderson Group has agreed to buy stricken asset management rival New Start Asst Management for a total price of around GBP115, which includes just

Henderson Group has agreed to buy stricken asset management rival New Start Asst Management for a total price of around GBP115, which includes just over GBP5m for the company’s shareholders, the rest going to its creditor banks.

The acquisition, which will take place following the implementation of the restructuring of New Star’s share capital announced on January 22, will comprise a cash offer for the entire current and future ordinary share capital of New Star and the acquisition of preference share capital to be issued on completion of the restructuring.

To part-finance the deal, Henderson has carried out a fully underwritten placing of 72.3 million new Henderson shares, representing approximately 9.9 per cent of its existing issued ordinary shares, to institutional and other investors, raising around GBP40m. The combined group will have global assets under management of just under GBP60bn.

“Very rarely will you find an opportunity to significantly enhance your strategic position at compelling financial terms,” says Henderson chief executive Andrew Formica. “New Star presents such an opportunity for Henderson and enables us to expand our footprint in our key markets, notably the UK retail market.”

John Duffield, the founder and outgoing executive chairman of New Star, says: “Henderson Group is an excellent partner for New Star, offering strong support and certainty to our clients and staff in these times. This deal will join together two managers with a similar culture and investment approach.”

The companies note that as the credit crisis has deepened over the last year, a number of New Star’s clients have signalled their concerns about net level of debt of some GBP200m  – taken out in 2007 to provide a dividend to shareholders including management and staff – in the face of a possibly prolonged economic downturn.

They say that despite the planned restructuring, which would have left nearly all of New Star in the hands of its banks, the uncertain nature of the financial markets and continuing redemptions have led to a significant decline in New Star’s assets under management and revenues, increasing concern about the group’s viability among its clients and other business partners.

They say that without the deal, New Star’s shares would probably be effectively worthless, although other potential acquirers were believed to be interested in New Star, including Schroders. New Star ordinary shareholders will receive 2 pence per share, while preference shareholders are set to receive 0.4 new Henderson shares and up to 48.4 pence in cash.

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