One in 10 jobs are at risk of being cut under U.K. fund manager Henderson Group’s deal to buy Janus Capital Group in the U.S., according to Roger Thompson, the soon-to-be chief financial officer of the combined business.
The layoffs loom as Henderson estimates $110 million of cost savings from the merger, including $80 million in the first year, the firm said in a March 21 document approved by the Financial Conduct Authority.
About “one quarter of the cost synergies will arise from reducing combined headcount in investment management and trading functions,” Henderson said in the document, while additional savings will come from the “rationalisation” of finance, human resources, legal, risk, compliance, IT and operations teams.
The merger, expected to be completed in May, will result in a wider range of outperforming actively managed funds and strategies across all major asset classes and sectors, according to a statement earlier this month from Henderson. The deal, which involves a combined $320 billion in assets, is the latest tie-up of active managers under rising pressure from stronger performing passive investment providers.
“We are publically talking about 10 percent of our headcount, so 90 percent are not affected,” Thompson, currently CFO at Henderson, said in an interview. In some instances, “both sides have an ‘A Team’ and there is only room for one team,” he said.
At the newly named firm, Janus Henderson Group, distribution and marketing teams will account for one fifth of cost savings, according to the document filed with the FCA. Thompson said the businesses are doing all that they can to minimize staff concerns, noting: “We want to make decisions and get on with it. We have not been hanging around.”
Though Thompson said the restructuring of distribution is necessary, he pointed to the geographical fits between the businesses. “We are really strong in the U.K., Europe and Asia, and Janus is very strong in the U.S. and Japan,” he said.
Fifty-four percent of their combined assets were in the Americas at end of last year, compared to 31 percent in Europe, Middle East and Africa, and 15 percent in Asia, the FCA document shows.
“We have been talking about building out our institution business in Europe,” Thompson said of Henderson. “We would have liked to have done more in 2016 but then the merger came along.”
He said he’s excited about doing business in Japan, where both Janus and Henderson have staff, noting that he had lived there for 12 months and “has a soft spot for it.”
The all-stock merger will give Henderson stockowners a controlling 57 percent stake in the business, with Janus shareholders owning the rest. The group will be based in London and have an expected market value of $5.6 billion, based on Henderson and Janus share prices, according to the FCA document.
Mergers among active managers could pick up as many have struggled to attract investors amid the rising popularity of low-cost, passive investment strategies. In early March, for example, Standard Life agreed to buy Aberdeen Asset Management in a deal that helps the firms gain scale as they seek to stem redemptions.
