From initial stages of discussions with CEO Andrew Formicaover the winter in London, JanusCapital Group Inc. CEO Dick Weil quickly learned that theircompanies had a number of things in common on how they viewed the culture,their respective client bases and the changing landscape of the assetmanagement business.
Both Weil and Formica view their as a transformative stepfor the companies in driving business growth, diversifying and expanding theirfootprint on a global scale. Pending regulatory approval, the combined company,which will be named Janus Henderson Global Investors, is expected to have amarket capitalization of approximately $6 billion.
"In some ways you can look at Janus and Henderson asmirror images of each other on the opposite side of the Atlantic," Weilsaid in a conference call discussing the deal.
The merger will be affected through a stock exchange witheach Janus shareholder receiving approximately 4.7 shares of Henderson stock.The combined company will be comprised of approximately 43% of Janusshareholders and 57% of Henderson shareholders, the companies said.
Upon completion of the deal, Japan's willremain the company's top shareholder with approximately 9% of holdings in JanusHenderson Global Investors.
"They will remain the critical strategic partner for usgoing forward," Weil said. "I'm happy to announce that Dai-ichi haspledged its support for the new transaction."
By 2020, Janus anticipates that the transaction will resultin $110 million in annual cost savings, Janus CFO Jennifer McPeek said on theconference call.
"If one of us had to borrow to buy the other one itwould have been a difficult balance sheet levering that neither of us wouldhave supported independently," Weil said.
Though Formica said that cross-border, international mergersin the asset management industry make sense from a strategic point view giventhe current industry backdrop, he pointed out that there have been relativelyfew major deals over the last decade. Janus could help the U.K.-based HendersonGroup increase its strategic presence in the U.S., and Janus is expected togain a foothold in emerging markets in Latin America and the Asia-Pacificregion.
"It's not easy, it has to be built on a shared vision,a cultural alignment and the firm's strategic intent," Formica said."The intelligent diversification that Janus has had just mirrorsHenderson's goals of globalization."
The deal is expected to be completed by the second quarterof 2017.