Gartmore takeover: What it means for your investments
Investment management group Henderson Global Investors looks set to buy troubled fund manager Gartmore.
Henderson initially declared itself out of the running for a Gartmore bid because it was still concentrating on integrating asset manager New Star, acquired in January 2009 into its setup.
However, reports now suggest Henderson is set to buy Gartmore at a significant discount price of £344 million.
Last year Gartmore shares were priced at 220p a share, but Henderson's offer puts them at just 95p per share.
Last Friday when speculation about a possible Henderson takeover emerged, Gartmore shares slightly rallied by 6%, ending on 104.8p; however, after news of Henderson's discounted offer they have since fallen again to 92.8p.
At the moment, the offer is still up in the air, a statement released from Henderson read: "Henderson Group confirms that it is in discussions regarding a potential acquisition of Gartmore. Henderson's proposal is conditional. No terms have been agreed and there can be no certainty that a transaction would proceed on the basis set out in Gartmore's announcement."
Gartmore has been looking for a buyer since its strategic review, carried out by Goldman Sachs, which followed a turbulent year.
Star fund manager Roger Guy recently announced he would be leaving the company causing droves of investors to pull their money out of the firm; this was followed by the departure of chief investment officer Dominic Rossi and most recently the company was hit with a $1.35 million fine for its breach of short–selling practices.
So what will it mean for you if you've invested in Gartmore?
Although Guy's departure from its European large cap fund team was cause for concern (Fidelity for example removed Gartmore's European Selected Opportunities, Corporate Bond and UK Absolute Return from its 'Select List'.) Darius McDermott, managing director of Chelsea Financial Services, thinks that overall Gartmore remains a good investment prospect.
"The brand is still strong; it has good China and balanced managed divisions and even its UK desk, though currently underperforming, is solid. There are no corporate problems and I see no need for investors to do anything whatsoever with their holdings."
An individual employed by an institution to manage an investment fund (unit trust, investment trust, pension fund or hedge fund) to meet pre-determined objectives (usually to generate capital growth or maximise income) in prescribed geographic areas or investment sectors (such as UK smaller companies, technology or commodities). The manager also carries the responsibility for general fund supervision, as well as monitoring the daily trading activity and also developing investment strategies to manage the risk profile of the fund.
Corporate bonds are one of the main ways companies can raise money (the other is by issuing shares) by borrowing from the markets at a fixed rate of interest (the reason why they are also known as “fixed-interest securities”), which is called the “coupon”, paid twice yearly. But the nominal value of the bond – usually £100 – can fluctuate depending on the fortunes of the company and also the economy. However it will repay the original amount on maturity.