Stilwell Financial will merge into its largest subsidiary, mutual fund giant Janus Capital Corp., at year-end and will distribute all of its products under the Janus brand name, the companies announced today.
Stilwell Chairman Landon Rowland said that the Stilwell offices in Kansas City, Mo., will shut down Jan. 1 and management of the firm will shift to Janus officials.
The reorganized company will be known as Janus Capital Management. Mark Whiston, who has worked with Janus for 11 years, most recently as president of retail and institutional services, will head the firm. Whiston replaces Janus founder Tom Bailey, who resigned earlier this summer after holding the top job at Janus for 33 years [see MFMN 6/17/02].
Janus Capital will oversee all of Stilwells investment management subsidiaries, including Janus, U.K.-based Nelson Money Managers, Berger Financial Group, and the Berger subsidiaries Enhanced Investment Technologies (INTECH) and Bay Isle Financial. Assets at those firms total roughly $150 billion.
Executives said the move is intended to cut costs and eliminate redundancies. The merger is expected to save $40 million once it goes into effect, officials said. Janus laid off roughly half of its workforce in 2001. Officials did not mention the possibility of future job cuts.
In addition, officials said the merger will expand Janus ailing product line, comprised mostly of out-of-favor growth and large-cap funds, by bringing a greater range of product choices under one brand.
"Investors want more choice, more products," Whiston said during a telephone conference today. "They want to decide how and where they can purchase them. Theyd like to have them offered under a single, reputable, recognizable brand."
Executives also want all of the funds under the Stilwell umbrella to capitalize on inroads Janus has made in distribution via financial intermediaries [see MFMN 8/26/02]. The intermediary channel now comprises two-thirds of Janus distribution, Whiston said.
Officials also hope the merger will make it possible for Janus to deliver a broader range of funds among institutional investors and within international markets. Janus currently has offices in Tokyo, Milan and Hong Kong.
The merger comes after a difficult year for Janus, which has watched its assets dwindle from $175 billion as of Aug. 31 last year to roughly $150 billion as of the same date this year. In addition, Janus executives are frustrated with their funds lackluster performance. The $1.06 billion Janus Adviser Worldwide fund, for example, has yielded year-to-date returns of negative 20.19%, according to Morningstar, and the $4 million Janus Aspen Strategic Value Institutional fund is posting returns of minus 16.76% year-to-date.
"We are not pleased with our performance over the past two years," said Jim Goff, Janus director of research. He said the merger will make it possible for the firm to improve its stock analysis and research. "Im confident that the steps we are taking to improve our research process will improve our funds performance in this difficult market," Goff said.
But Rowland said the merger has been "a long-held goal of Stilwell," which has sought to "create a single, diversified platform for distributing investment products globally."
Rowland also said the merger will create changes to the companys board of directors. Janus is searching for three new independent directors. In addition, Helen Young Hayes, Janus managing director of investments, and Jim Craig, the firms former chief investment officer, are expected to join the board by Jan. 1.
Officials, meanwhile, said a transition team of executives from both Janus and Stilwell will help monitor the merger. The teams work will continue throughout 2003.