Henderson set to snap up rival Gartmore

Fund manager Henderson Group is to buy its troubled rival Gartmore to create one of the largest fund managers in the UK, with £78.1bn of assets.

The buyout, which is expected to complete in the next three months if agreed by shareholders, values Gartmore at 335.3m, which is less than the half its value when it floated in December 2009.

Gartmore has been beset by problems since it became a listed company, culminating in the loss of its star fund manager Roger Guy, which led it to appoint Goldman Sachs to help it review how to take the business forward in November.

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The Gartmore brand is expected to disappear by the summer and it will be delisted from the stock exchange.

The deal will be funded entirely with shares, with Gartmore shareholders being given two shares in Henderson for every three they own in the target company.

Henderson's assets under management would increase by 27 per cent after it swallows Gartmore.

Henderson chief executive Andrew Formica described the move as a great opportunity and said it would create significant value for shareholders.

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He said: "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."

Gartmore chief executive Jeffrey Meyer said the vast majority of his team would move across to Henderson. He added: "We are becoming part of an enlarged group with much greater diversity and scale."

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