Fund manager Henderson Global Investors has made an offer of £115million in shares and cash for its ailing rival, New Star Asset Management group.
In its acquisition plans revealed today, Henderson revealed that it is conducting a fully underwritten placing of up to 72.3 million New Henderson Shares, representing approximately 9.9 per cent of Henderson's existing issued ordinary shares and has offered 2p in cash for each New Star share – last year they were worth 240p.
This offer values the firm's ordinary shares at £21.6million and gives New Star a total enterprise value of £115million.
New Star's shareholders will receive about £5.4million; the rest of the money will go to the firm's creditors – New Star had previously warned its investors that they would most likely get very little from any deal.
Last month, New Star was forced into a radical a restructuring due to its £240million debt burden, and a debt for equity swap gave the firm's bank syndicate, led by HBOS, control of the company.
Commenting on the Offer, Andrew Formica, Chief Executive of Henderson
, said that the acquisition provides a great opportunity for Henderson.
“Very rarely will you find an opportunity to significantly enhance your strategic position at compelling financial terms," he said.
"New Star presents such an opportunity for Henderson and enables us to expand our footprint in our key markets notably the UK retail market.”
While John Duffield, Executive Chairman of New Star, said that the deal would offer "strong support and certainty to New Star's clients and staff."
"This deal will join together two managers with a similar culture and investment
approach," he said.
"I have always admired the integrity and brand values of the Henderson Group and am very pleased they will enable New Star to move to its next phase of growth”.
The Offer and the Preference Share Acquisition are expected to be completed by 31 March 2009.
© Fair Investment