Henderson buys Gartmore for £335m

Henderson announced last week that it is to acquire Gartmore for £335m, a discount to its share price.

The deal ends months of uncertainty for Gartmore after the resignation last year of Roger Guy and Guillaume Rambourg, the managers of its flagship European equity products.

Gartmore appointed Goldman Sachs to conduct a strategic review in the fourth quarter. The review initially focused on cost-cutting but led to the group putting itself up for sale. (article continues below)

Henderson says it will be able to cut overlapping costs and retain assets under management (AUM), increasing the combined group’s profitability. However, analysts warn that merging firms see some initial attrition in AUM.

Henderson has locked in managers who run 84% of Gartmore’s assets, smoothing the merger but retaining much of Gartmore’s costs.

The deal leaves Henderson with a cash position £48m lower than its debt.

Henderson was known as an institutional and investment trust manager until it acquired New Star two years ago.

The acquisition of Gartmore, worth three times that of New Star, would make Henderson Britain’s sixth largest retail fund manager, compared with its present position of 14th by AUM. It would also boost its presence in higher-margin absolute re­turn products and hedge funds.

The enlarged group’s assets would rise to £78 billion, although its funds are expected to decline in number as similar funds are merged.

Graham Kitchen, a British equity manager, will assist with the integration as Henderson’s new head of equities. Bill McQuaker will step down to be deputy head and focus on his multi-manager funds.

Allyson Foster will join Henderson to lead its new British marketing effort after serving as the head of partnership marketing at Ignis.