2nd UPDATE: Henderson Upgrades UK Fund Management Ranking With New Star
30 Janeiro 2009 - 9:09AM
Dow Jones News
Henderson Group PLC (HGI.LN) Friday moved to strengthen its
position in the U.K. retail fund-management industry, with its
recommended acquisition of embattled rival New Star Asset
Management PLC (NSAM.LN), which would result in the new firm having
GBP59.5 billion assets under management.
Henderson said it is a "strategically compelling acquisition"
that would significantly increase its scale and distribution in the
U.K. retail fund-management market, which has been hit from the
global economic turmoil and led to major consolidation moves in the
sector.
The enlarged group would be ranked the fifth-largest U.K. retail
fund manager by funds under management.
Under the offer, Henderson will pay GBP22 million for New Star's
ordinary shares, or 2 pence a share, as well as GBP73 million for
New Star's preference shares following its restructuring. Henderson
will also cover New Star's GBP20 million debt, leaving it
debt-free.
New Star's founder and executive chairman, John Duffield, said
in a statement that Henderson is an "excellent partner for New
Star, offering strong support and certainty to New Star's clients
and staff in these times."
The deal will join together two managers with a "similar culture
and investment approach," he said."
To help fund the agreed deal, which has a total enterprise value
of GBP115 million, Henderson plans to raise GBP65 million from a
share placement and issue. The remaining GBP50 million will come
from internal cash reserves.
The tie-up will result in integration costs of approximately
GBP31 million after tax, and is expected to be boost earnings by
2010, according to Henderson.
At present, Henderson and New Star have assets under management
of GBP49.5 billion and GBP10 billion, respectively.
Henderson also announced that it would book a 2008 profit before
tax and non-recurring items of about GBP80 million. Operating
profit before tax and non-recurring items from continuing
operations was GBP106.7 million in 2007.
The group plans to pay a final dividend of 4.25 pence a share,
resulting in a total dividend of 6.1 pence a share for 2008, steady
from a year earlier.
Shore Capital analyst Danny Clarke said the acquisition and
terms were "broadly as expected," although "slightly expensive
versus recent deals" such as the Aberdeen Asset Management and
Credit Suisse (CS) tie-up and GLG Partners Inc. (GLG) and Societe
Generale SA (13080.FR) union.
"Price-adjusting mechanism is positive," although there are
concerns over integration and funds under management retention and
performance, he added.
Henderson's current trading is "slightly better than expected,"
said Clarke, who has a "solid hold" on the stock.
The deal and trading update were well-received by investors, who
pushed Henderson shares up 13 pence, or 21%, at 75 pence in a flat
London market.
New Star shares, which hit a record high of just over 480 pence
in June 2007, were at 2 pence, up fractionally.
New Star, one of the better-known names with the public in asset
management, began experiencing liquidity problems late last year
and said it was exploring alternatives for its business, including
a possible sale. It disclosed Monday that it was in talks with
Henderson that could lead to an offer for the firm.
The deal is subject to approval from both set of shareholders,
the U.K.'s Finance Services Authority and other regulatory bodies.
Henderson said it hopes to complete the purchase by December.
Company Web site: www.henderson.com
www.newstaram.com
-By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290;
lilly.vitorovich@dowjones.com
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