U.K.-based Liontrust Asset Management PLC intends to acquire 100% of the issued share capital of Neptune Investment Management Ltd. for a total consideration of up to £40 million and has entered a conditional share purchase agreement with the latter's significant shareholders.
The acquisition, once completed, will lift Liontrust's assets under management by £2.8 billion to £17 billion.
As part of the deal, Neptune's CEO Robin Geffen and the Neptune Investment Team will join Liontrust. Geffen will step down as CEO once the deal completes and focus on managing funds and leading the investment team — which will be renamed Liontrust Global Equity Team.
Liontrust will issue up to £35 million in new ordinary shares as the initial consideration, £29 million of which will be allotted to Neptune shareholders once the deal completes and the remaining £6 million will be allotted once the two parties agree on Neptune's net asset value.
Furthermore, up to £5 million in new ordinary shares — the conditional consideration shares — will be allotted to Neptune shareholders within 30 days of the deal completion's third anniversary, if the Neptune Investment Team is managing an average of at least £4 billion in assets under management in the quarter leading up to the third anniversary.
All shares issued to Neptune shareholders will be subject to a 50% lockup for a period between 12 months to 24 months starting from the date they were issued.
Liontrust said July 31 that the purchase is part of its strategic acquisition plan to broaden the range of its products and speed up its growth.
Under the deal, Liontrust is acquiring gross assets with a value of £10.8 million as of Dec. 31, 2018.
Neptune's integration is expected to cost Liontrust roughly £2 million in transaction costs and £16 million for the reorganization. These costs will be treated as exceptional items incurred in the fiscal years ending March 31, 2020, and March 31, 2021.
Liontrust expects the acquisition to be earnings enhancing in relation to its adjusted diluted EPS with effect from the financial year ending March 31, 2020.
Alpha Financial Markets Consulting UK Ltd., RSM Global and Simmons & Simmons LLP supported Liontrust on the due diligence for the proposed deal.