andJanus Capital GroupInc. agreed to an all-stock merger of equals to form JanusHenderson Global Investors Plc, according to an Oct. 3 press release.
Themerger will be effected via a share exchange, with each share of Janus commonstock exchanged for 4.7190 newly issued shares in Henderson. Shareholders ofHenderson and Janus are expected to own about 57% and 43%, respectively, of thecombined group's shares upon closing of the deal, based on the current numberof shares outstanding.
Followingthe merger, Dai-ichi LifeInsurance Co. Ltd., Janus' largest shareholder, will hold about 9%of the combined group. Dai-ichi intends to further invest in the company toraise its ownership interest to at least 15%. The parties agreed, subject tothe completion of the merger, to sell Dai-ichi options to subscribe for up toabout 5% of new Janus Henderson Global Investors shares.
Dai-ichi anticipates additional investments in the JanusHenderson Global Investors product range of up to $500 million, which wouldbring its total committed invested assets in the new company to $2.5 billion.
JanusHenderson Global Investors will apply for admission to trade on the New YorkStock Exchange as its primary listing, retaining Henderson's existing listingon the Australian Securities Exchange.
HendersonCEO Andrew Formica and Janus CEO Dick Weil will together lead Janus HendersonGlobal Investors. The combined group's board will comprise equal numbers ofHenderson and Janus directors, with Henderson Chairman Richard Gillingwaterbecoming chair of the combined board and Janus Chairman Glenn Schafer servingas deputy chair.
HendersonCFO Roger Thompson will serve as CFO of Janus Henderson Global Investors; JanusCFO Jennifer McPeek will become chief operating and strategy officer; Janus'chief compliance officer, David Kowalski, will become chief risk officer;Janus' head of investments, Enrique Chang, will become global chief investmentofficer; and Henderson's global head of distribution, Phil Wagstaff, will servein the same role at the combined company.
JanusPresident Bruce Koepfgen will become head of North America; Henderson'sexecutive chairman for Pan-Asia, Rob Adams, will serve as head of Asia-Pacific;and Henderson's general counsel and company secretary, Jacqui Irvine, willbecome group general counsel and company secretary of the combined group.
Priorto closing and subject to shareholder approval, Henderson shareholders willreceive a final dividend for the year ending Dec. 31, the timing of which maybe accelerated, so that it occurs prior to deal completion. Prior to closing ofthe merger and subject to the Janus board's approval, Janus shareholders willreceive quarterly cash dividends in November 2016 and February 2017. Afterclosing of the merger, Janus Henderson Global Investors shareholders will beentitled to receive an interim dividend for the three-month period ending March31, 2017, in an amount to be determined by the combined group's board.
As aresult of the merger agreement, Henderson's £25 million share buyback program,first announced May 18 and set to take place in the second half, will no longerbe carried out. Under the buyback, the company has not bought back any of itsordinary shares of 12.5 pence each, nor has it bought back any of its CHESSDepository Interests.
The companies are targeting at least $110 million of annualrun rate net cost synergies, to be weighted toward the first 12 months andexpected to be fully realized three years after completion of the deal.Estimated one-time costs of $165 million to $185 million are expected to beincurred to achieve the recurring cost synergies target. The merger is expectedto be double-digit accretive to both companies' EPS, excluding one-off costs,in the first 12 months following closing of the deal.
Themerger, which is subject to customary conditions and regulatory approvals, isexpected to close in the second quarter of 2017.
Bankof America Merrill Lynch and Centerview Partners served as financial advisersto Henderson, while Freshfields Bruckhaus Deringer LLP was the legal adviser tothe company. BofA Merrill Lynch also served as corporate brokerand sponsor to Henderson.
Januswas advised by Loeb Spencer House Partners, an investment banking division ofLoeb Partners Corp. and Skadden, Arps, Slate, Meagher and Flom LLP andAffiliates.