* Enlarged group has 78 bln pounds assets under management
* Offer of 0.6667 Henderson share for one Gartmore share
* Deal worth 335 million pounds, or 92.1 pence per share
* Completion expected within three months
* Gartmore shares up 10.8 percent, Henderson up 10 percent
(Adds spokesman's comment, performance data)
By Chris Vellacott
LONDON, Jan 12 (Reuters) - Anglo-Australian funds house Henderson is buying rival Gartmore, to create one of Britain's largest fund managers, closing the book on Gartmore's troubled year as a public company.
Henderson said many of Gartmore's most-prized fund managers, controlling 84 percent of its assets, will stay on with the enlarged group, which will have 78 billion pounds ($122 billion) under management after adding on Gartmore's 16.5 billion pounds.
Henderson shares were up 10 percent to a nine-month high at 1245 GMT, while Gartmore was up 10.8 percent at 100.4 pence.
"The transaction comfortably offers at least 10 percent earnings enhancement in (2011)... We expect the announcement to be taken well by the market today," Cannacord Genuity analyst Catherine Heath said in a note.
Henderson said on Wednesday it will pay 0.6667 new share for every Gartmore share, putting a 92.1 pence price on each for a 1.7 percent premium to Tuesday's close and valuing the business at 335 million pounds ($523 million).
The deal, which came after a troubled year for Gartmore as a public company, crystallised a 58 percent loss for investors who bought shares when it floated in December 2009 at 220 pence.
Gartmore suffered a litany of woes, including the departure of star managers Guillaume Rambourg amid a regulatory probe and, later in the year, Roger Guy. Both exits spooked clients and sparked heavy outflows of assets.
Guy still holds 4.6 percent of Gartmore, which will translate into a holding worth at least 15.5 million pounds in the enlarged group, based on Tuesday's closing prices.
Some Henderson funds, including the UK Alpha Fund, bought more than 5 million Gartmore shares at 101 pence in November, roughly 10 percent more than the Henderson's offer.
But despite the loss on Gartmore, the UK Alpha fund returned 28.8 percent against the 14.5 percent posted by its benchmark of reference, FTSE All Share, a Henderson spokesman told Reuters, adding clients had not asked for compensation.
"Fund managers run funds according to their views and invest in a broad range of stocks," he said, adding: "There will be no provision, there is no need."
STAYING ON BOARD
"By bringing across fund managers and integrating the (Gartmore) business... we will be able to enhance margins significantly," Henderson chief executive Andrew Formica said.
"Its recent travails should not overshadow the fact that Gartmore is one of the best known managers in UK fund management and its assets are performing well," he said.
Henderson said Gartmore fund managers with collective responsibility for 84 percent of Gartmore's assets under management had endorsed the deal, easing fears many could walk out under new management.
John Bennett, Gartmore's star European equities manager, is among those committed to stay.
The acquisition also brings other Gartmore managers on board, such as emerging markets and Latin America specialist Chris Palmer and global equities manager Neil Rogan, filling key strategic gaps for Henderson.
However, the marriage of the two companies may lead to some departures. "Clearly there are overlaps and it is likely people will be affected. But it is too early to comment on the details," a Henderson spokesman said.
Gartmore shareholders will hold around 22.5 percent of the enlarged group. Henderson has received irrevocable undertakings to support the bid representing 60 percent of Gartmore's shares.
Institutional shareholders in Gartmore had advocated a quick sale, following the departure of fund manager Roger Guy, responsible for about 17 percent of its assets. Henderson had long been touted as a potential bidder for Gartmore, having raised its stake in the rival to just over 14 percent from nearly 12.4 percent. (Reporting by Chris Vellacott, Cecilia Valente; Editing by Sinead Cruise and Dan Lalor) ($1 = 0.6413 pound)