Victory Capital raises offer as Janus Henderson bidding war heats up
Victory Capital has increased its offer for rival asset manager Janus Henderson as the bidding war with Trian Fund Management and General Catalyst heats up.
The latest offer from Texas-based Victory Capital comes just days after its previous approach was rejected, with the firm saying on Tuesday it would offer $40 (£29.96) per share in cash for the business.
This is up from its $30 offer when it made its first grab for the group in February.
Victory Capital said the $10 increase provides “significantly greater certainty to Janus Henderson shareholders”.
Under the terms of the fresh bid, Janus Henderson shareholders would also receive 0.25 Victory Capital shares for each of their shares, allowing them to own 31 per cent ownership of the combined asset manager. This is down from 38 per cent under the original offer.
Janus Henderson shares jumped 2.4 per cent following the offer, trading at $51.7, while Victory Capital shares rose 1.6 per cent to $68.4.
Rival bids
The new offer also comes just weeks after Nelson Peltz’s Trian Fund Management and a group of investors led by venture capital firm General Catalyst agreed to buy the firm for $49 a share.
This values the group at $7.4bn, while both of Victory Capital’s bids value the group at $8.6bn.
But Janus Henderson’s board said last week that the initial offer from Victory Capital was “not in the best interest” of the group or its shareholders.
Victory Capital hit back, claiming the combined company “would be highly diversified and better positioned to compete at scale”.
It added that under the merger agreement with Trian, it would be owned by a “newly created acquisition vehicle with no operating experience” and “offers no benefits of incremental scale”.
Trian already had a stake of more than 20 per cent in Janus Henderson.
The firm also said the new offer was at a 16 per cent premium to the Trian proposed, with the group previously saying it would aim for $500m a year in cost savings from the merger.
Janus Henderson’s board of directors, which recommended the Trian and General Catalyst deal, said last week that its “aggressive plan cost-cutting” may lead Janus Henderson to “suffer substantial client outflows”.
David C Brown, chair and chief executive of Victory Capital, said: “Victory Capital’s improved proposal provides Janus Henderson shareholders meaningful upfront cash value, while allowing them to retain significant ownership in a stronger combined company.”
“Our improved proposal is fully actionable, and we do not agree with the risks associated with our compelling transaction previously cited by the special committee.
“We have repeatedly demonstrated our ability to integrate businesses while retaining clients and investment professionals without disruption to the investment process or the client experience.”
Changing landscape
The bidding war comes amid a wave of consolidation within the asset management industry, as it continues to be slapped with higher costs and investors pulling money from actively managed funds for cheaper index-tracking alternatives.
Recently, US asset manager Nuveen snapped up London stalwart Schroders in a surprising £9.9bn deal, while Natwest purchased Evelyn Partners for £2.7m.
The deals have thrown the longevity of the UK industry into question and raised concerns of further consolidation.
Janus Henderson was formed in 2017, from the merger of US group Janus and UK-based firm Henderson Global Investors.
It manages nearly $500bn in assets.
Victory Capital was founded in 2013, following a managed buyout from Keycorp, and has $327bn assets under management.
In a press release issued on Tuesday, Janus Henderson confirmed its special committee received a “revised unsolicited non-binding proposal” from Victory Capital.
The release said the firm’s merger agreement with Trian “remains in full force and effect” and the board has not “withdrawn or modified its recommendation” that shareholders vote in favour of the approval of the merger agreement.
The shareholder vote is set for 16 April.