Jupiter Fund Management pushes on with Merian deal despite outflows
Jupiter Fund Management today said it was pushing ahead with its takeover of Merian Global Investors despite both being hit by outflows.
Jupiter said it had net outflows for the quarter of £2.3bn. It said assets under management fell £7.8bn in the quarter to £35bn – the majority of which it said were caused by market movements.
In February Jupiter agreed to acquire Merian for £370m.
Today it said it was still committed to the deal, but said some of the assumptions and projections made for the combined business were now incorrect.
Merian was hit by net outflows in the quarter of £2.6bn. Its assets under management at 31 March were £15.7bn, a fall of £6.8bn in the quarter.
“Despite the market volatility which both firms have experienced, the strategic and financial rationale of the acquisition remains compelling,” Jupiter said today.
When the deal was announced Merian was expected to contribute a run-rate operating margin of not below 50 per cent and up to 60 per cent.
However, after recent declines in asset values, Jupiter said Merian is expected to contribute a run-rate operating margin of not below 40 per cent.
At the time of the deal it was anticipated that the operating margin of Merian would be close to 50 per cent. Jupiter said it now expects Merian’s operating margin to be “lower than originally anticipated but still attractive”.
Merian was also expected to deliver low to mid-teen accretion in underlying earnings per share from 2021 and increasing in 2022 onwards.
Now, based on assets under management of Jupiter and Merian at 31 march – and assuming no further changes – it is expected underlying earnings per share accretion “would be improved relative to expectations at the time of the announcement”.
Jupiter’s share price fell 5.6 per cent today to 203p.