Shares in Henderson were soaring on the FTSE 259 after the fund management group said it had agreed terms on the acquisition of rival Gartmore.
Under the deal Henderson will be paying 92.1 pence per Gartmore share, valuing the company at £335.3 million. In addition Gartmore shareholders will receive 0.6667 of a New Henderson share for each Gartmore share.
Henderson said it expected to be paying out a final dividend at least equal with the 4.25 pence per share paid in 2009.
At the end of 2010 Gartmore had net debt of around £49.5 million, while the costs of integration and the acquisition to Henderson are expected to reach £70 million.
The deal is expected to be completed in the next three months and is still subject to the approval of regulators and the shareholders of Henderson and Gartmore.
Andrew Formica, Chief Executive of Henderson, said, "The acquisition of Gartmore is a great opportunity for Henderson. Gartmore is a natural fit with Henderson, with a highly complementary strategy and stable of products. Its recent travails should not overshadow the fact that Gartmore is one of the best known firms in UK fund management and its assets are performing well. By bringing across fund managers and integrating the business onto our own platform we will be able to enhance margins significantly. We will also improve our offering to both sets of clients by expanding our product range, for instance in absolute return. The combined business will be one of the largest UK retail fund managers. I am, therefore, confident that it will create significant value."
Jeffrey Meyer, Chief Executive of Gartmore, said, commented, "This transaction brings significant benefits to our shareholders and clients. We are becoming part of an enlarged group with much greater diversity and scale. We are benefiting from significant synergies which will enhance Henderson's operating margins, earnings per share and long term growth rate. And the vast majority of our investment teams are joining Henderson thus ensuring continuity of the investment process. We have been impressed with Andrew Formica and the Henderson team, their vision for the business and are very excited about the potential of the combined company."
By 14:25 shares in Henderson were up 10.35 per cent on the FTSE 250 to 152.50 pence per share, while Gartmore shares jumped 11.48 per cent to 101.00 pence per share.