Henderson Group is merging with Janus Capital, which takes its name from the dual-countenanced Roman god of gateways. Appropriately, the enlarged asset manager will have two public faces, co-chief executives Andrew Formica and Dick Weil from Henderson and Janus respectively. The danger, as with Janus himself, is that the direction of travel will be ambiguous.
The rationale for this nil-premium merger is clearer. Janus, the smaller partner, brings a US dimension to a Henderson operation focused on the UK and Asia, not least through the presence of ex-Pimco “bond king” Bill Gross. Assets under management will rise from $195bn to $320bn. The combined business should be better placed to compete in a world where active managers are under pressure from regulators and index investors.
Annual cost savings are estimated at a punchy $110m. Taxed and capitalised, that will be worth more than $1bn, compared with a combined market capitalisation of some $6bn before the deal announcement. This explains why shares in Henderson jumped 16 per cent at the opening bell.
The betting is that an integration involving Mr Formica is likely to succeed. The energetic Australian successfully incorporated troubled rivals Gartmore and New Star into Henderson. He says he will be able to repeat the trick with Janus because Mr Weil shares his vision.
But the dual CEO set-up is unusual and looks like a sop to two powerful managers. Every other job at the combo, chaired by Henderson’s Richard Gillingwater, has been carefully allocated to one or other partner. The business will cancel its UK quote to save money, while keeping listings in the US and Australia and a cheap Guernsey tax registration. Joint CEO remuneration that last year would have cost $14m is evidently an affordable luxury.
UK shareholders may also question plans for Janus’s largest shareholder, Daiichi, to receive options to subscribe to 5 per cent of the enlarged group. Any preferential giveaway to the Japanese insurer should raise eyebrows.
Investors may thus find details of the deal to quibble with, even if its broad logic is unimpeachable. The proposed name, Janus Henderson, could meanwhile dismay anyone called “Janice Henderson”, which is how Mr Formica pronounces it. Poor lady. She should brace herself for misdirected phone calls.