Rumors of a Janus sale crept into the media again last week. An analyst reportedly pegged Franklin Templeton again as a possible buyer of the Denver-based mutual fund firm (see MFWire, 2/5/2009), but fundsters told MFWire that a different buyer is circling: OppenheimerFunds.

Spokespeople for Franklin, Janus, OppFunds and OppFunds parent MassMutual all declined to comment for this story.

Yet one industry insider said that OppFunds employees have been buzzing about the possible deal "for months." So why might OppFunds find a Janus buy attractive?

First, while the MassMutual subsidiary is based in Manhattan, it has significant operations in Denver, even after recent cuts (see MFWire, 1/27/2009). That proximity, one fundster said, could help OppFunds gain "synergy" and cut costs by combining its Denver teams into one location.

Secondly, OppFunds may be interested in Janus' fixed income team. As the markets tumbled in recent months, OppFunds has received significant flak for losses in its fixed income offerings, losses that led to the loss of at least one 529 bond fund mandate and to changes in the firm's fixed income leadership (see MFWire, 12/16/2009 and 1/9/2009). One insider described the deal as a way for OppFunds to try to "get over this PR nightmare" around fixed income, as he sees Janus' fixed income offerings as solid.

As for cash, OppFunds' parent is mutually-owned, and thus not public, a structure that may allow the fund firm greater access to capital without worries about short term earnings, one fundster noted. And the relatively cheap price of Janus, thanks to its fallen stock price, should make it an even more attractive target to OppFunds.

Janus' stock closed at $5.82 on February 12, 2009, down from $8.94 on January 2, 2009 and $25.87 on February 12, 2008; in market cap terms, that values Janus at only $918.687 million. Its assets under management fell to $123.5 billion on December 31 and its fourth quarter revenue dropped to $177.1 million ($708.4 million annualized). So, Janus now only costs 1.267 times annual revenue or 0.74 percent of AUM -- asset managers traditionally sell for between two and five percent of AUM.

Both fund firms also distribute through advisors, and both are known as growth and international shops, meaning that OppFunds might look to gain significant economies of scale through the combination while shoring up its own teams in the wake of cuts. 

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