Henderson takeover of Gartmore could see major consolidation

Advisers say the potential takeover of Gartmore by Henderson could result in manager departures and a large number of fund mergers.

Last month, Gartmore confirmed it was in negotiations about a conditional offer by Henderson to acquire its entire share capital. The negotiations are based on a proposal at a slight discount to its share price at the close of trading on December 16. If an offer were made on the basis of 95p a share, it would value Gartmore at about £344m.

“I would expect managers to leave and funds to merge”

Meera Patel, a senior analyst at Hargreaves Lansdown, says a buyout by a stronger firm is great news for investors, given the difficult 2010 Gartmore endured, but there would be many more fund rationalisation issues compared with the Henderson/New Star deal in 2009.

She says: “You could see the synergies between Henderson and New Star in terms of a combined range. This time, it looks more of a deal for assets rather than people, so I would expect managers to leave and funds to merge.” (article continues below)

Darius McDermott, the managing director of Chelsea Financial Services, says: “There are some big crossovers between the two, namely Europe, multi-manager and fixed income, and it will be interesting to see what happens there. Europe has been a success at both firms so I would be surprised if they did not try to keep the likes of John Bennett and other members of the Gartmore team but the multi-manager side should see a lot of change as the Henderson offering is already enlarged following the New Star deal.”

Adrian Lowcock, a senior investment adviser at Bestinvest, says: “More managers will stay compared with the New Star deal. However, the huge choice of funds is likely to see mass rationalisations if the deal goes through.”