Henderson ties up Gartmore takeover

SHARES in Anglo-Australian fund manager Henderson were up 9.26 per cent yesterday, after it announced it would buy troubled rival Gartmore.

The deal sees shareholders receive two Henderson shares for every three Gartmore shares, valuing the company at £335m.

Around 63 per cent of Gartmore shareholders have so far approved the deal, after the boards of both companies unanimously recommended a takeover.

A significant number of Gartmore’s fund managers have been locked into the deal, representing 84 per cent of the company’s assets under management (AUM).

The combined team will now hold around £78bn AUM, making it one of the largest UK retail asset managers.

Three key Gartmore fund managers remain in talks over joining Henderson, despite its takeover team having worked closely with the Gartmore team since November, a source close to the deal said.

However, Henderson is said to be confident the remaining fund managers will join as the two firms integrate.

Some analysts have approached the news with caution, warning investors could continue to redeem their assets in a continuation of the troubles suffered by Gartmore.

David McCann, analyst at Numis said: “The management assumption [AUM] will stay where they are is extremely aggressive.

“There is a whole raft of reasons why money will continue to [walk out] the door. People don’t like uncertainty, particularly when its people handling their money.”

However, McCann rated Henderson shares “hold” due to the potential lift in share price from the takeover.

Gartmore’s woes started after the departure of influential fund managers Guillaume Rambourg and Roger Guy last year, which contributed to plummeting share prices and investors withdrawing funds.

Its outflows in the fourth quarter were £4.8bn, of which £3.1bn related to the European large cap team formerly run by Guy and Rambourg.

The company’s share price dropped by more than half from its initial 2009 flotation price over the course of last year to as low as 88.5p per share last week.

Yesterday’s takeover news saw Gartmore shares lift to 103p per share.

And sources close to the deal believe any risk of contagion following the departure of Guy and Rambourg has now passed.

Chief executive of Henderson Andrew Formica said: “The acquisition of Gartmore is a great opportunity for Henderson.

“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.”