Jupiter ascends as investors applaud Merian Global buy

Jupiter ascends as investors applaud Merian Global buy

Merian was the product of a £550m management buy out from Old Mutual in 2018 structured by private equity firm TA Associates.

In a trading statement alongside news of the deal, Jupiter said its assets under management at the end of 2019 were 42.8 billion pounds, from 42.7 billion pounds a year earlier.

Responding to press speculation, the board of Jupiter Fund Management has announced the proposed acquisition of Merian Global Investors.

Jupiter's management said the deal 'reinforces Jupiter's core United Kingdom franchise and extends capabilities into attractive product gaps'.

Jupiter said the all-share offer also included an additional deferred earn-out of up to £20m payable to Key Merian shareholders, subject to growing and retaining revenues in their investment strategies. Merian was founded by Richard Buxton, who led the buyout from Old Mutual but who subsequently stepped down as CEO in January of a year ago.

Bloomberg reported on Saturday that Jupiter's negotiations on the Merian deal were underway, with a likely purchase price of less than £500m in cash and shares. "In turn, we will 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".

"Recent large scale M&A in United Kingdom asset management has not proved to be a value-creative event for investors", analyst Paul McGinnis said in a note Monday. While there is always uncertainty in such events, Jupiter has a strong philosophy to allow fund managers the freedom to express their views, even if they differ from each other, and this should help ease any concerns investors might have.

The acquisition will diversify Jupiter's existing business, with its current top five funds falling from 46% of AUM to 33% of the AUM of the new enlarged group.

Darius McDermott, managing director of FundCalibre, said that Formica had "experience of these types of acquisitions" during his time at Janus Henderson. He became co-chief executive of the merged group alongside Dick Weil before leaving a year later after the board chose Weil as the sole CEO.

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

The merger is subject to regulatory and shareholder approval.

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