Gartmore Group, which put itself up for sale late last year following the departure of several senior fund executives, is set to be acquired by Henderson Group plc, parent company of Henderson Global Investors (Henderson).
Henderson yesterday announced its offer to acquire Gartmore Group Limited (Gartmore). The combined Group will have around GB78bn assets under management and become one of the largest UK retail asset managers by AUM.
"The acquisition of Gartmore is a great opportunity for Henderson,” says Andrew Formica, Chief Executive of Henderson Group. “Gartmore has a highly complementary strategy and stable of products to that of Henderson. Its recent travails should not overshadow the fact that Gartmore is one of the best known managers in UK fund management and its assets are performing well. By bringing across fund managers and integrating the business onto our own platform we will be able to enhance margins significantly. We will also better serve both sets of clients by expanding our product range, for instance in Absolute Return.”
Under the terms of the proposed acquisition, Gartmore shareholders will receive two Henderson shares for every three Gartmore shares. The boards of both Gartmore and Henderson intend to recommend unanimously to shareholders that the offer be accepted.
Completion of the acquisition is expected to take place within the next three months, subject to a number of shareholder and regulatory approvals.
Henderson confirmed that a significant number of Gartmore’s fund managers have already agreed to join Henderson, representing 84% of Gartmore’s assets under management. They include: Charlie Awdry – Emerging markets, John Bennett – European equities, Chris Burvill – Cautious managed, Rob Giles – UK small cap, Tony Lanning – Multi-manager, Adam McConkey – UK small cap, Luke Newman – UK long/short equities, Chris Palmer – Emerging markets, Simon Peters – Long/short financials, Neil Rogan – Global equities, John Stewart – Japan long/short equities and Ben Wallace – UK long/short equities.
The acquisition of Gartmore will create a combined investment company believed to have one of the strongest teams of active fund managers in the industry. This combined expertise is recognised by the 13 Citywire rated fund managers, 27 OBSR fund ratings and 20 Standard & Poor’s fund ratings currently held across both groups.
Henderson stated that the acquisition offers “compelling benefits” as it:
- reinforces Henderson’s existing investment capabilities with the addition of many of Gartmore’s portfolio managers;
- significantly enhances Henderson’s presence in UK retail asset management;
- increases the AUM in absolute return products to over USD6bn;
- expands and strengthens the product range, investment capabilities and distribution reach of the Combined Group;
- complements Henderson’s and Gartmore’s existing investment processes and approach;
- is consistent with Henderson’s higher margin growth strategy and adds product strengths that encompass traditional long only and absolute return offerings in both institutional and retail segments, in particular, by combining Gartmore’s absolute return franchise with the existing Henderson absolute return range;
- will benefit from Henderson’s previous experience on integrating New Star;
- delivers certainty to Gartmore’s Shareholders, clients and employees; and
- provides significant economies of scale, enabling the Combined Group to extract cost efficiencies through the reduction of operational overlap.
Henderson added that proposed acquisition of Gartmore will allow investors and advisers to refocus on the quality of the underlying investment teams at Gartmore as well as enhancing the investment capability of the combined group.
In the two years since announcing its proposal to buy New Star, Henderson has successfully integrated the business in its entirety. This should provide comfort to Gartmore’s clients that Henderson is capable of integrating Gartmore successfully.
Proposed timetable
Phase 1 – Deal completion Within three months, subject to shareholder and regulatory approvals and certain conditions
Phase 2 – Client administration integration and brand integration UK OEIC range – summer 2011
Phase 3 – Fund merger completion UK OEIC range – summer 2011.
