Magellan soars +25% as Barrenjoey merger locked in by $130M placement

It’s got nothing to do with extractive industries (insofar as you don’t see high net worth investors as an exploitable resource) and it’s very Sydney-focused, but Magellan Financial (ASX:MFG) has on Tuesday soared around ~25% as it locks in a merger with investment bank Barrenjoey.

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The news put Magellan on the map yesterday and reflected the biggest down under news item ex-Iran early week; on Tuesday, a placement underpinning that merger at $130M wrapped up, basically locking in the deal.

Barrenjoey is a relatively infantile investment bank on the Oz circuit, but one which – no doubt thanks to a ripper few years for U.S. equities (read: tech stocks and their discontents) and materials stocks in more recent history – has quickly shot to the top. So much so that it’s now eating up Magellan after five years on the map.

So did Magellan, too shoot to the top of the top gainers boards on Tuesday after Monday’s trading halt was lifted. All in all, the combined entity is being referred to as a ‘mini-Macquarie’ in some of the more sycophantic parts of the financial commentariat.

“We are very pleased to welcome a number of new highly respected investors to the register and view their participation as an endorsement of the merger and future prospects for the group,” Magellan Chair Andrew Formica said.

Of course, for Barrenjoey, this deal makes sense given that Magellan looks a little bit like a distressed asset on a 5Y horizon. And for that reason, its shareholders are probably keen as hell to eke as much juice as they can out of the lemon. If that sounds harsh, well, check out the following chart today.

Says it all, really. Did anybody just hear a vulture?

MFG last traded at !10.46/sh.

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