Jupiter Fund Management Plc’s potential acquisition of Merian Global Investors would fit its aim for U.K. consolidation, but withTA Associates Management seemingly ready to sell at a discount little over two years after its purchase there are “questions about the quality of the target,” according to Canaccord Genuity.
Potentially, TA Associates may be attempting to create value from Merian by selling to a business it knows well in Jupiter, which suggests that a largely share-based transaction is likely, Canaccord analyst Portia Patel said in emailed comments.
Based on consideration of 500 million pounds ($652.4 million) and Merian’s assets under management of 22.4 billion pounds, the deal would value Merian toward the top end of the range, said Patel, who has ahold rating on Jupiter. Bloomberg News yesterdayreported that Jupiter is in talks to buy the company for less than 500 million pounds.
Key for Jupiter shareholders will be news on cost synergies, the structure of any transaction, the impact on earnings per share and the future of its “attractive” dividend yield, Canaccord added. The broker said this potential deal highlights the importance of mergers and acquisitions for asset managers as they face net outflows and increasing costs.
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