Jupiter Fund Management is poised to acquire Merian Global Investors, an independent active asset manager with £22.4bn in assets under management (AUM), for £370m (€444m) upfront through the issue of new shares.
The deal is subject to the satisfaction of customary conditions including regulatory consents and Jupiter shareholder approval. Its completion is expected in the second half of 2020.
Jupiter said the move would enhance its position as one of the UK’s leading active asset managers with more than £65bn of combined AUM.
It would also reinforce Jupiter’s core UK franchise and extend capabilities into attractive product gaps, it added.
There would be no change to Jupiter’s senior leadership, but one additional non-executive board member would be nominated by TA Associates Management – a significant long-term shareholder of Jupiter with an approximate 16% shareholding – following completion.
Also, Merian’s investment team and assets would migrate onto Jupiter’s operational platform.
The acquisition is consistent with Jupiter’s strategic priorities and accelerates its growth plans, it said.
Andrew Formica, Jupiter’s chief executive officer, said: “This is an exciting acquisition that enhances our position as a leading UK asset manager, provides increased scale and diversification into attractive product areas, and creates stronger future growth prospects for the business.”
He added that Jupiter would “be able to offer a wider choice of strongly performing active investment strategies to our clients, while shareholders will benefit from a highly earnings accretive deal delivered through substantial cost synergies”.
Mark Gregory, Merian’s CEO, said: “I believe the enlarged business will be more strongly positioned to offer greater choice and investment performance to clients and continue to meet clients’ ever-evolving needs.”
Jonathan Miller, director and manager research ratings UK at Morningstar, said: “It is somewhat surprising that after Merian’s own change of direction backed by private equity around 18 months ago, they’re set to be acquired.”
Miller said that Formica made several acquisitions while CEO of Henderson, one of them being the merger between Henderson Global Investors and Janus Capital in 2016, adding that Formica “has already put this strategy to work after less than a year as CEO of Jupiter”.
The deal, Miller explained, “is symptomatic of the pressure active managers are finding themselves under”, noting that Merian was valued just shy of £600m in June 2018, “but Jupiter is set to pay £370m for the acquisition, with £29m in net debt and Merian shareholders becoming a 17% shareholder of the enlarged entity”.
The Jupiter board has received financial advice from Fenchurch Advisory Partners and JPMorgan Cazenove in relation to the acquisition.