Man Group (LON:EMG) , the asset manager, is buying American rival GLG Partners in a $4.50 per share merger deal that values GLG at US$1.6bn and creates a diversified, alternative investment manager with approximately US$63bn of funds under management. The cash-and-shares move reflects Man’s strategy of acquiring high quality discretionary investment management capability to broaden its range of diversified, liquid strategies. It said the combination of the two businesses would align the interests of both firms’ fund investors, management and shareholders and create a well capitalised industry leader.

In particular, the deal is being sold to investors as a combination of two established investment management businesses with complementary investment strategies and the integration of sales, structuring and operations between the firms. The two sides are understood to have complementary geography of distribution franchises and investors, offering the opportunity to market products into new markets and to new investors. Man has already identified annual potential cost savings of approximately US$50m with one third expected to be achieved in the 2011 financial year.

Separately, Man said its dividend for the year to March 31, 2011 would now total at least 22 cents per share – down from the 44 cents per share it paid out in the year to March 2010. In early trading, the company’s shares fell by 2.5% to 216p.

Peter Clarke, the chief executive of Man, said: “Today we have announced a transaction with GLG which positions Man as the industry leader in liquid, alternative investment strategies. The combination will provide comprehensive and compelling investment solutions to our investors worldwide, meeting investor demands head on and providing the acumen and flexibility investors are seeking in today's rapidly changing markets.”

Mr Clarke added that the fit between the two businesses was excellent; across investment strategies, geography and investor base. He said Man’s quantitative and multi-manager expertise complemented GLG's long track record in discretionary investment strategies, with both firms focusing on liquid, transparent and dynamic trading.

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