Fund manager Magellan Financial Group (MFG) and investment bank Barrenjoey Capital Partners plan to merge to create a financial services group valued at A$1.6 billion (US$1.1 billion).
They said Magellan would issue106.839 million MFG shares valued at $903 million to buy the 64% of Barrenjoey it does not already own, with 92.627 million shares going to 460 employees and some incoming directors and 14.212 million going to Barclays plc.
Magellan has also agreed to buy up to 10% of Barrenjoey from Barclays for $148.9 million, funded by non-underwritten placement and share purchase plan at $8.45 per MFG share.
The two companies said the Board believed the merger represented a compelling opportunity resulting in improved business diversification and resilience, an enhanced client proposition across both businesses, the ability to retain and attract the best talent, and a strong combined balance sheet providing opportunity for growth.
“The merger creates a diversified, client-focussed Australian financial services group, with a proven talent base across investment management, corporate finance, equities, fixed income and capital markets,” they said in an ASX announcement.
Barrenjoey generated $108 million in adjusted net profit after tax on $522 million in revenue over the last 12 months.
The merged group would be owned 58.2% by MFG shareholders, 31.7% by Barrenjoey shareholders and parties, 5.3% by parties taking up the placement, and 4.9% by Barclays.
Magellan Financial Group (ASX: MFG) shares last traded at $8.40, valuing it at $1.42 billion.
The fund manager has been plagued by client fund withdrawals and a plunging share price since influential founder Hamish Douglas left in 2022.
