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Henderson barters £8m discount for New Star

Henderson is to acquire New Star Asset Management for £8m less than the figure previously stated.

In a general meeting today, Henderson chairman Rupert Pennant-Rea said the price of the proposed acquisition will come down from £115m to £107m in full and final settlement of the price adjustment for the revenue run-rates at completion.

He said: “We have come across some ambiguities in the way the price adjustment mechanism would work, so earlier today we reached a compromise with the banks and New Star which provides certainty for all parties.”

Henderson will fund the deal with £44m of cash, £46m from the placing of the group’s shares earlier this year and the rest from new share issuances upon completion.

If shareholders approve this transaction, Henderson will double the UK retail assets through the combined entity with around £55bn assets under management.

Pennant-Rea said the deal would offer Henderson the opportunity to attract more retail investors to its direct property business and strengthen its presence in the US institutional market and overall investment expertise.

He also said it would also enable cost efficiencies through reducing staff numbers and transferring New Star’s business onto its own operating platforms, cutting the cost to income ratio of the combined business to 40 per cent or even lower.

He said: “Based on reasonable assumptions, it should boost the group’s earnings per share significantly from 2010 onwards. In turn, we hope to bring stability to the New Star business, giving its clients the certainty and security they are looking for.”

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