NEW YORK -- Henderson, a London-based investment firm, plans to combine with U.S. rival Janus Capital and create a new company that would manage more than $320 billion in assets.
The combined company will be called Janus Henderson Global Investors, and its stock will be traded on the New York Stock Exchange when the deal closes, which is expected to happen in the second quarter of next year. The new company will have its headquarters in London and keep offices in Denver, where Janus is based.
Henderson shareholders will own about 57 percent of the new company, and Janus shareholders will own 43 percent. Henderson Chief Executive Officer Andrew Formica and Janus CEO Dick Weil will be co-CEOs of the new company, and both will be based in London.
Bringing the two companies together will create one company that manages assets across the world. Henderson's biggest market is the U.K., while Janus has its strongest presence in the U.S. The combined company will also manage assets in Asia, South America and Australia.
Janus is also where billionaire bond investor Bill Gross works. He joined the company after leaving Pimco two years ago.
Shares of Henderson Group PLC, traded on the London Stock Exchange, rose nearly 17 percent Monday. Shares of Janus Capital Group Inc., traded on the New York Stock Exchange, rose $1.69, or 12 percent, to close Monday at $15.70.
The tie-up comes as the investment industry grapples with increased regulation and competition.
"Others will say they wish they'd done it or they'll contemplate it as well," Formica said in a Bloomberg TV interview on Monday. "It's the most appropriate thing for our clients, our employees and our shareholders."
Active managers specializing in stock and bond picking have been losing market share to lower-fee passive investment firms in recent years. The combined firm will still be a relative minnow compared with BlackRock Inc.'s $4.9 trillion of assets under management and Vanguard Group Inc.'s $3.5 trillion.
BlackRock's Laurence D. Fink said in May that he expects to see consolidation as firms struggle to beat benchmarks and as regulation favors index strategies. Analysts from Jefferies Group LLC and Cantor Fitzgerald LP said Henderson's deal will focus interest on more deals in the industry.
Both Formica and Weil have sought to diversify their businesses through acquisitions, new fund offerings and overseas expansion. Weil hired Gross to manage its Global Unconstrained Bond Fund, which now has $1.5 billion in assets.
"There are immediate headwinds for the industry," said Alex Birkin, head of wealth and asset management at consultants EY in Europe. "The organic growth strategy is difficult and slow, particularly in today's environment, so if you want to take significant step in terms of growth quickly it's your only option."
"This deal may kick off a round of merger speculation involving other asset managers such as Jupiter," Cantor analyst Keith Baird said in a note to clients. Jupiter Fund Management PLC, whose shares rose as much as 6.2 percent in London trading, declined to comment.
Formica said talks with Janus started in February, before the British vote to leave the European Union. That vote saw investors pull more money from U.K. funds than any equivalent period in the global financial crisis. The British exit "didn't accelerate the deal, nor did it have any impact," he said.
Janus Henderson will be a U.K. tax resident, and the firm is set to become one of the 50 largest asset managers in the world. Formica said that while the deal fits the description of corporate inversion -- moving a company's tax residence to a lower-tax country -- it will not reduce the tax bill in the U.S.
Japanese insurer Dai-ichi Life Holdings Inc., Janus's biggest shareholder, will have a 9 percent stake in the combined company and plans to increase that to at least 15 percent. The firm will apply to have its primary listing on the New York Stock Exchange because it offers greater liquidity, with a secondary listing in Australia to appeal to Asian investors, according to Monday's statement. Janus Henderson will not trade on the London Stock Exchange because of the costs involved.
"We passionately believe this is the best way forward to build a global actively managed asset-management company," said Weil, who took over as CEO of Janus in 2010. "I have kept my eyes and ears open the last seven years for opportunities in the market place. I didn't have a specific design on Henderson."
Information for this article was contributed by The Associated Press and by Sarah Jones, Nishant Kumar and John Gittelsohn of Bloomberg News.
Business on 10/04/2016