Well a bid has finally emerged for struggling fund management business Gartmore Group, but the City doesn't seem to like it much.
Gartmore - which floated a year ago at 220p but put itself up for sale after it ran into compliance problems and its star fund managers departed - admitted after the market closed on Friday that it was in takeover talks with larger rival Henderson. A price at a "slight discount" to 98.75p (the closing price on December 16) was mentioned. But it said there was no guarantee an offer would be forthcoming.
Over the weekend came reports that Henderson was offering a cash and share mix worth around 95p a share. So, unsurprisingly, Gartmore's shares have dropped today by 9.5p to 95.3p, a 9% decline. Henderson meanwhile is up 2.5p to 133p, but analysts have issued negative comment on the merits of any deal for the company. Phil Dobbin at Shore Capital said:
We struggle to see merit in this deal from Henderson's perspective, we view Gartmore as a damaged franchise which, we do not feel it is unfair to say, has performed disastrously since its IPO both operationally and in terms of stock rating. We therefore reduce our rating on Henderson from hold to sell.
Henderson's acquisition of New Star demonstrates that even very cheap acquisitions are by no means risk free. Transaction risk was one of the drivers of our negative recommendation. We remain reduce pending details.
