(Reuters) — U.S. asset manager Janus Capital (JNS.N) and London-listed rival Henderson Global Investors (HGGH.L) on Monday said they had agreed to an all-share $6 billion merger, sending Henderson’s shares soaring.
The merger will enable the group to cut costs and increase diversification, Henderson Chief Executive Andrew Formica told a media call, and comes as the industry looks to streamline operations to protect margins amid widespread pressure on fees.
“The combined product line-up will be much more balanced and diverse,” he said. The combined company would manage more than $320 billion in assets, the firms said.
Henderson and Janus shareholders are expected to own approximately 57 percent and 43 percent, respectively, of Janus Henderson Global Investors’ shares, with the merger completing in the second quarter of 2017, subject to regulatory approvals.
The merger will involve a share exchange in which each Janus share will be exchanged for 4.719 newly issued shares in Henderson, the firms said in a statement.
“We see this as a positive move with complementary asset bases and a very material cost synergy figure,” analyst Paul McGinnis at Shore Capital said in a client note.
The firms said they were targeting an annual run rate in net cost synergies of at least $110 million, representing around 16 percent of the combined group’s underlying earnings before interest, taxes, depreciation and amortization.
Janus’ largest shareholder, Dai-ichi Life (8750.T), supports the merger, the firms said.
The combined group will apply for a primary listing in New York, keeping Henderson’s Australian listing but delisting in London.
The group’s headquarters will be in London, Formica said. Talks on the merger began at the beginning of the year and were not impacted by the Brexit vote, he added.
Formica will continue in the merged firm as co-chief executive, alongside Janus CEO Dick Weil, who will also be co-chief executive.
Henderson’s shares were up 16 percent at 269 pence at 0724 GMT, after hitting their highest since Jan 2016.