Jupiter Fund Management in £370m offer for Merian

Jupiter Fund Management in £370m offer for Merian

Jupiter Fund Management in £370m offer for Merian

Jupiter Fund Management's shares have soared by more than 8% this morning, following confirmation of a £390m acquisiton deal with Merian Global Investors.

The British fund manager will make a payment of £370m by issuing new Jupiter stock to Merian shareholders, with an additional deferred performance payout.

Following the deal, which is expected to complete in the second half of the year, Merian shareholders will own roughly 17% of Jupiter's capital while key management shareholders - who are tied in through contracts which prevent them working for a competitor - will own another 1% of the capital.

Andrew Formica, Jupiter's chief executive, said: "This is an exciting acquisition that enhances our position as a leading United Kingdom asset manager, provides increased scale and diversification into attractive product areas, and creates stronger future growth prospects for the business".

The acquisition brings Jupiter another £22.4bn of actively-managed assets taking its total assets under administration to more than £65bn.

Jupiter, long considered a merger target in its own right, said the deal with Merian would accelerate its growth plan, adding scale and diversifying its fund range. With this acquisition, our business will benefit from an increased capacity to attract, develop and retain high quality talent, backed by further investment in our platform and technology.

Merian chief executive Mark Gregory added: "Jupiter is a great strategic and cultural fit with our business".

After losing more than 50% of its value in 2018 as certain key funds shed assets, the firm recovered somewhat a year ago after the appointment of former Janus Henderson co-CEO Andrew Formica, with many expecting his arrival to lead to new deals.

"Both Jupiter and Merian have strong United Kingdom teams, but there should be capacity for that given the combined assets they would have in this space".

Merian was the product of a £550m management buy out from Old Mutual in 2018 structured by private equity firm TA Associates. Merian was founded by Richard Buxton, who led the buyout from Old Mutual but who subsequently stepped down as CEO in January of previous year. Outflows during 2019 were 4.5 billion pounds.

The deal creates the second-largest manager of retail funds in the United Kingdom with approximately £40 billion of assets.

"Ultimately, Jupiter is unlikely to do anything to disrupt the successful Merian teams, particularly the renowned United Kingdom equities offering".

Fundcalibre managing director Darius McDermott said while the reports were surprising, there has been a growing trend of consolidation in asset management for the last decade. He became co-CEO of the merged group alongside Dick Weil.

Active managers face increasing pressure to pair up amid heightened regulatory costs and intense competition from low-priced index and exchange traded funds.

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