UPDATE: Henderson To Acquire Gartmore For GBP335.3M In Shares

Asset manager Henderson Group PLC (HGI.LN) Wednesday said it has agreed to acquire rival Gartmore Group Ltd. (GRT.LN) in a deal valued at GBP335.3 million.

"Gartmore is a natural fit with Henderson, with a highly complementary strategy and stable of products," Henderson Chief Executive Andrew Formica said. "By bringing across fund managers and integrating the business onto our own platform, we will be able to enhance margins significantly."

The deal creates one of the U.K.'s largest retail asset funds institutions with combined estimated assets under management of GBP78.1 billion as of Dec. 31. 2010, of which GBP61.6 billion is held by Henderson, the groups said in a joint statement.

Under the terms of the takeover, Gartmore shareholders will receive 0.6667 of a new Henderson share for each Gartmore share. Based on Henderson's closing share price of 138.2 pence on Jan. 11, the offer values Gartmore at 92.1 pence a share. Gartmore shareholders will own about 22.5% of Henderson after the transaction.

In addition, Henderson said it has secured commitments from Gartmore portfolio managers with responsibility for 84% of its assets under management, alleviating fears that key talent would leave following the transaction.

At 0814 GMT, shares in Gartmore were up 7 pence, or 8%, to 98 pence, while Henderson shares were up 8 pence, or 6%, at 147 pence. Henderson has a market value of about GBP1.3 billion.

The Henderson board expects to recommend a final dividend that is no less than the 2009 final dividend of 4.25 pence per Henderson share.

Based on estimates at Dec. 31, 2010, the combined group would have adjusted pro forma gross debt of GBP300 million and net debt of GBP47.7 million at completion.

Henderson and Gartmore last month said they were in talks about a potential deal, after Gartmore's independent future was put in doubt by the departure of some of its top portfolio managers.

Henderson's swoop on the asset manager comes after its successful integration of another troubled asset manager, New Star Asset Management, which it bought in early 2009.

Henderson is being advised by UBS AG (UBS)--which was one of the bookrunners on the Gartmore float--and by Ondra Partners. Gartmore's financial adviser is Goldman Sachs Group Inc. (GS).

-By Simon Zekaria, Dow Jones Newswires; [phone]; [e-mail]