Delay could prove fatal for Gartmore

HENDERSON is unlikely to agree an acceptable offer for Gartmore before the Christmas break, sources close to Henderson say, raising the risk that the embattled fund manager could collapse before a deal is done.

Henderson confirmed yesterday it is in negotiations to snap up its stalling rival and is said to have offered 95p per share for the company, whose shares closed yesterday at 95.8p. That equates to £346m in total equity, with Gartmore’s latest trading update putting net debt at £80m.

But while Gartmore is pushing for a quick deal before Christmas, Henderson is in no hurry to complete. Sources close to Henderson say that the company is keen to include a price adjustment mechanism in the deal, whereby it can reduce its offer if Gartmore’s share price plummets during negotiations.

But if Henderson drags its feet for too long, Gartmore could lose so much of its value as to make the deal pointless. The company’s latest results showed that its assets under management (AUM) had seen outflows of £700m during the third quarter of this year, though overall AUM was roughly steady at £20bn. However, it is not known how much more investors might have withdrawn since then.

Some observers have said that the deal could also be slowed by the Financial Services Authority (FSA), which is already investigating Gartmore over the conduct of one of its former fund managers, Guillaume Rambourg.

Gartmore has been in crisis since the departure of its star fund manager Roger Guy in early November.

Henderson is being advised on the deal by UBS and Ondra Partners, while Gartmore has hired Goldman Sachs.