Jupiter Fund Management PLC (LON:JUP) is pressing ahead with the acquisition of Merian Global Investors that may be a lot cheaper after the two companies’ assets under management fell £7.8bn and £6.8bn respectively in the first quarter of 2020 due to the coronavirus crisis.
AUM was hit by £2.3bn of net outflows in the past three months, part of wider coronavirus-driven outflows seen in the asset management industry, with market moves representing the majority of the reduction to £35bn at the end of March.
Flows have “stabilised” and have been “broadly flat” in April, with the new month also seeing a final dividend paid to shareholders as planned.
The FTSE 250 group, which said it continued to “review and challenge” costs but confirmed it has no current intention to furlough any staff, has lowered its expectations for margins from Merian to a run-rate of “not below 40%”, having previously said they should be 50-60%, as Merian’s AUM decline to £15.7bn has dragged its annualised revenue run-rate down to £98mln from £140mln.
However, the accretion to earnings per share was said to be improved from the “low to mid teens” in the original announcement.
Jupiter will seek the approval of shareholders at immediately after the annual meeting on 21 May.
Broker Shore Capital assumed the better EPS accretion from the Merian deal was the result of the lower consideration from the much lower Jupiter share price and from the fixed number of shares agreed.
“We wonder whether shareholders will also think this is even better deal at the time of the vote,” Shore Cap analysts said.
Shares in Jupiter fell 6.5% to 201.6p in early trading on Wednesday, where they are down 52% in the year to date.