Henderson Global Investors has agreed to acquire crisis-hit rival fund manager Gartmore Group for £366m.
The combined group is expected to have around £78bn assets under management.
Under the terms of the proposed acquisition, Gartmore shareholders will receive two Henderson shares for every three Gartmore shares.
Henderson is also taking on Gartmore’s net debt of £49.5m.
The boards of both Gartmore and Henderson have said that they intend to recommend unanimously to shareholders that the offer be accepted.
Henderson Group CEO Andrew Formica said the acquisition of Gartmore is a great opportunity for Henderson. Gartmore has a highly complementary strategy and stable of products to that of Henderson.
"By bringing across fund managers and integrating the business onto our own platform we will be able to enhance margins significantly. We will also better serve both sets of clients by expanding our product range, for instance in Absolute Return," Formica said.
Completion of the acquisition is expected to take place within the next three months, subject to a number of shareholder and regulatory approvals.