Jupiter’s takeover of Merian gets support from key advisors
Jupiter Fund Management cleared a potential hurdle in its takeover of rival money manager Merian Global Investors when influential investor advisory firms gave their qualified support to the deal.
Institutional Shareholder Services and Glass Lewis both advised Jupiter’s shareholders to support the purchase when they vote on May 21, according to two reports sent to investors on Friday and seen by Bloomberg. The firms are generally considered influential in guiding shareholder votes on corporate governance and transactions.
The ISS report gives the deal, which will be voted on by Jupiter shareholders on May 21, “qualified support.”
ISS notes that since the agreement, Merian’s assets under management have declined further than Jupiter’s. But adds: “The weight of Merian’s shareholders in the enlarged group is inferior to Merian’s contribution in terms of assets under management, net revenues and EBITDA for 2019 and a purchase price adjustment mechanism is also in place.”
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Jupiter agreed in February to buy Merian by issuing just over 95 million shares to its owners, led by Boston-based private-equity firm TA Associates Management. At the time, that amounted to a payment of $458 million. Jupiter’s shares plunged in the market turmoil unleashed by the coronavirus pandemic, however, and that number has fallen to about $247 million.
“Overall, we see no reason to doubt the strategic or financial aspects of the transaction, which would create a larger active fund management company and provide opportunities to achieve operating efficiencies and economics of scale,” Glass Lewis said in its report. “Based on these factors and the support of the board, we believe the proposed transaction is in the best interests of shareholders.”
Active asset managers like Jupiter and Merian have been under pressure for years to bulk up as they face stiff competition from passive and index-tracking funds. Some big names have decided that combining forces was the best way to build assets, including the 2017 merger that created Janus Henderson Group. Jupiter CEO Andrew Formica, who was then head of Henderson Global Investors, was instrumental in making that deal happen.
The history of Janus Henderson, as well as that of Standard Life Aberdeen, which was formed in a merger the same year, shows that tie-ups aren’t a foolproof strategy. Both firms have struggled to retain investors’ confidence — and cash — since their creation.
“This merger is happening,” said Darius McDermott, managing director of Chelsea Financial Services, said of the Jupiter-Merian combination. “We can all expect it to be completed as per the timetable, which is the end of May. That’s partly because there were transparent conditions on the cost and price.” — Additional reporting by Jan-Henrik Förster and Nishant Kumar