Janus-Henderson Merger: Insights on Henderson Shareholders
The Henderson Group (HGG) and Janus Capital (JNS) merger will create demonstrable value for shareholders on both short- and long-term bases. Shareholders of Henderson will have the majority stake in the combined company, mainly due to its larger size. Henderson Group didn’t lose much money compared to Janus Capital, because Janus Capital has been seeing withdrawals by institutional investors in recent quarters due to lower alpha generation, resulting in lower valuations for the company. Management of the combined company will aim to deliver strong shareholder value on the back of effective cost synergies of around $110.0 million and by delivering high revenue growth on a long-term basis. The largest shareholder of the combined group will be Dai-ichi Life, which was Janus’s largest shareholder with a 20.0% stake. In the combined company, Dai-ichi plans to increase its holdings to a minimum of 15.0% and has purchased a series of warrants in this regard.
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Cost and revenue synergies
By 2020, cost synergies of $110.0 million, which comes out to be 19.0% of the merged group’s underlying EBITDA (earnings before interest, tax, depreciation, and amortization) is expected to be realized. Of this, around $80.0 million is expected to be realized within one year after completing the merger. More than 50.0% of the cost reduction savings is expected from non-staff and staff-related operating expenses. Around a quarter of the cost reduction is expected from removing overlapping functions, thereby eliminating duplication. Around a fifth will be from marketing and distribution functions by reducing the headcount.
As far as revenue synergies are concerned, revenues are expected to rise on the back of the Dai-ichi relationship, new joint initiatives, and cross-selling opportunities. These synergies will position the company well to compete with alternative asset managers (XLF) such as Ameriprise Financial Services (AMP), Apollo Global Management (APO), and Affiliated Managers Group (AMG).
Of Henderson’s total shareholder base, 65.0% is made up of Australian CDIs (CHESS depositary interests), Henderson employees, and UK index funds at about 8.0% each.