British fund manager Jupiter has signed an agreement to purchase local rival Merian Global Investors in a £370m ($480.8m) deal.
The deal, which awaits shareholder and regulatory nod, is said to lead to the creation of the second-largest retail fund manager in the UK.
The merged entity will have over £65bn in assets and adopt the Jupiter brand.
The deal value is significantly less than the price paid to spin out Merian, formerly called Old Mutual Global Investors.
Merian was spun out from Old Mutual in 2018 in a management buyout headed by Richard Buxton and backed by TA Associates.
As of 31 December 2019, Merian managed £22.9bn in assets.
TA Associates’ relationship with Jupiter is also not new. The private equity firm supported the management buyout of Jupiter from Commerzbank in 2007.
Jupiter-Merian transaction details
Initially, Jupiter will pay £370m by issuing new shares. The deal also includes an earn-out payment of £20m to key management shareholders of Merian, including Buxton.
The acquisition is the first major deal under Jupiter CEO Andrew Formica, who joined last year.
Formica noted: “This is an exciting acquisition that enhances our position as a leading UK asset manager, provides increased scale and diversification into attractive product areas, and creates stronger future growth prospects for the business.
“It is also consistent with our strategic priorities, adding strong investment talent with a similar culture and investment philosophy.”
Merian shareholders will have a 17% interest in the consolidated group, with its key management collectively owning a stake of around 1%.
TA Associates will have a 16% holding in the combined business.
Jupiter also agreed to pay-off the debts of Merian and absorb Merian’s investment team as part of the deal.
Its own leadership will remain unchanged although TA Associates will nominate a member to the Jupiter board upon deal closure in the second half of 2020.