Henderson Group reveals Janus Capital merger

Janus Henderson Global Investors will be listed on Wall Street, with around $416bn assets under management.

Henderson Group chief executive Andrew Formica said things will continue as normal for shareholders.

Anglo-Australian asset manager Henderson Group has struck a friendly merger deal with Janus Capital, the company famous for luring bond guru Bill Gross away from PIMCO.

The new group, Janus Henderson Global Investors, will manage assets of around $US320 billion ($416.71bn) and will be listed on the US markets with a combined capitalisation of around $US6bn ($7.81).

Henderson Group chief executive Andrew Formica told journalists he had often talked with Janus boss Dick Weil when either was in the US or UK. Both men will run the business as co-chief executives.

For Australian shareholders of Henderson, which was demerged from AMP more than a decade ago and listed on the London Stock Exchange, things will continue as normal. Instead of the CHESS depositary interest correlating to the LSE scrip, it will now trade in relation to the NYSE listed stock. Tax arrangements will also continue as normal, with Henderson remaining a UK domiciled company and taxpayer and with Colorado-based Janus paying its US taxes.

A share exchange will execute the deal, expected to close before mid-2017, with each Janus share to be swapped for $4.72 new Henderson shares. Henderson shareholders will count for 57 per cent of the new group’s scripholders.

“For an Australian shareholder very little will change,” Mr Formica said. “They’ll see a business that has a far improved earnings growth trajectory and that is truly global business and can weather any market conditions,” he said.

Local Henderson employees were also expected to escape cost-cutting, which is expected to shear 10 per cent, or $110 million, off the duo’s cost base. Back office costs, staff and IT costs are expected to be expunged from both organisations.

“The businesses in Australia are quite complementary,” Mr Formica said, noting that cutting down on capital intensity in active management was not the main aim of the merger.

“This is not two businesses coming together because they feel under threat,” Mr Formica said. “Active management can and does add value for clients.”

“It’s not a surprise form a Henderson point of view. We’ve always been clear about our desire to penetrate the US market. Janus has wanted to improve its status outside of America,” he said.

Janus’ largest shareholder, Dai-ichi Life, has committed to supporting the merger

Henderson recently unveiled a 41 per cent slide in profit after tax for the six months through June after wild market ructions whacked around £30m off performance fees. The company suspended its UK property fund in a bid to fend off client redemptions in the wake of the UK’s Brexit referendum. Investors withdrew £2bn from the group over the last half, with 90 per cent of retail outflows occurring in the lead-up and in the wake of the vote in June.

“Obviously the conversations we were having straddled the referendum vote,” Mr Formica said. “Brexit doesn’t chance the driver or rationale for this,” he said. “London remains the leading global financial sector, and I expect that despite Brexit that will continue.”