In a blow to Janus Henderson, the board of Henderson European has announced that it is proposing a combination with Fidelity European, creating a trust with net assets of about £2.1bn. The enlarged trust would be managed by Fidelity’s existing team of Sam Morse and Marcel Stötzel.
The decision follows the shock resignation of the trust’s managers in January.
The combination would be via a s110 scheme – with the Henderson trust liquidated and its assets absorbed by Fidelity European. There is a cash exit option on the table, equivalent to one third of the Henderson trust’s NAV and at a 1.75% discount to FAV (NAV less costs of the deal). About a third of Henderson European’s shareholders have indicated that they are in favour of the idea.
The Henderson European board believes that the deal offers:
- an experienced and award-winning portfolio management team supported by Fidelity’s extensive equity research resource, focused on high-quality, predominantly large-cap, European equities.
- a larger company with economies of scale, increased secondary market trading liquidity and enhanced marketability.
- an enhanced discount management policy supporting a mid-single digit discount to NAV.
- a 12-month management fee waiver on the assets transferred to FEV following which, in combination with the cash exit at HET, is currently expected to result in the transaction being marginally NAV accretive for rolling HET shareholders.
- introduction of a new, competitive fee structure which, when combined with the enhanced scale, is forecasted to result in a lower OCR for HET’s shareholders.
- an immediate uplift in market value of their shareholding, expected to be in excess of 6% based on HET’s current share price discount.
The proposed fee structure is 0.7% on the first £400m of NAV, 0.65% on the next £1bn, and 0.55% on the balance.
The combined trust will seek to maintain any discount to NAV in mid-single digits in normal market conditions.
Expect to see documents published soon, with meetings in September, and the deal wrapped up by the end of that month.
[QuotedData comment, James Carthew: This looks like a great outcome for Henderson European shareholders and creates a true champion in this sector.]
HET / FEV : Henderson European to merge with Fidelity European
