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Henderson takeover of Gartmore could see major consolidation

Advisers say the potential takeover of Gartmore by Henderson could result in manager departures and a large number of fund mergers.

Last month, Gartmore confirmed it was in negotiations about a conditional offer by Henderson to acquire its entire share capital. The negotiations are based on a proposal at a slight discount to its share price at the close of trading on December 16. If an offer were made on the basis of 95p a share, it would value Gartmore at around £344m.

Hargreaves Lansdown senior analyst Meera Patel says a buyout by a stronger firm is great news for investors, given the difficult 2010 Gartmore endured but there would be many more fund rationalisation issues compared with the Henderson/New Star deal in 2009. She says: “You could see the synergies between Henderson and New Star in terms of a combined range. This time, it looks more of a deal for assets rather than people so I would expect managers to leave and funds to merge.”

Chelsea Financial Services managing director Darius McDermott says: “There are some big crossovers between the two, namely Europe, multi-manager and fixed income, and it will be interesting to see what happens there. Europe has been a success at both firms so I would be surprised if they did not try to keep the likes of John Bennett and other members of the Gartmore team but the multi-manager side should see a lot of change as the Henderson offering is already enlarged following the New Star deal.”

Bestinvest senior investment adviser Adrian Lowcock says: “More managers will stay compared with the New Star deal. However, the huge choice of funds is likely to see mass rationalisations if the deal goes through.”

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