Man Group Plc rose in London trading after analysts at UBS AG said the past year’s share-price decline for the world’s biggest publicly traded hedge-fund manager makes it a takeover target.
The shares rose 4.5 percent to 96.7 pence at 4:02 p.m. local time, giving London-based Man Group a market value of 1.8 billion pounds ($2.8 billion).
Based on yesterday’s share price, Man Group was trading at a 5 percent discount to the combined value of its cash and hedge-fund businesses, UBS analysts led by Arnaud Giblat wrote in a report today. A bid of 150 pence a share, or 50 percent above Man Group’s current price, would likely be approved by investors, wrote Giblat, who has a buy rating on the company.
“There is now a substantial risk of Man Group receiving a bid approach,” he wrote in the report. “Man Group would offer significant strategic value to an acquirer, as the group is well positioned to benefit from the long-term structural trends in asset management.”
Man shares have declined 23 percent this year. They plunged 58 percent in 2011 as Europe’s sovereign debt crisis triggered investment losses and prompted client redemptions from Man Group’s funds. Analysts have been cutting their profit estimates on Man Group amid concern that the company’s fee income may be constrained.
Man Group has a “top-tier distribution network” in Japan and Asia, which may make it an attractive target for asset managers in North America, according to Giblat. Potential bidders include New York-based BlackRock Inc., the world’s biggest asset manager, and San Mateo, California-based Franklin Resources Inc., manager of the Franklin and Templeton mutual funds, Giblat wrote.
A spokeswoman for Man Group declined to comment. A spokeswoman for BlackRock had no immediate comment and a spokesman for Franklin declined to comment.
Man Group bought London-based hedge-fund company GLG Partners Inc. in October 2010 for $1.5 billion. Chief Executive Officer Peter Clarke made that deal after analysts questioned whether Man was too dependent on AHL Diversified Plc, which relies on computer models to predict trends in futures prices.
AHL accounts for more than one-third of Man Group’s $58 billion in assets. The fund has fallen about 3.4 percent this year after declining 6 percent in 2011, according to Bloomberg data.