UPDATE 2-Janus CEO departed after rift on sale-sources

* Gary Black wanted to sell the company-sources

* Board preferred to raise capital-sources

* Mass Mutual and Franklin Resources were among bidders (Adds comments from investors, additional comment from Janus and from other sources)

By Steve Eder

NEW YORK, July 15 (Reuters) - A rift between Janus Capital Group Inc's (JNS.N) chief executive and its board over the sale of the company was behind CEO Gary Black's surprise resignation, sources familiar with the talks said on Wednesday.

The mutual fund company for months had been in negotiations with bidders including Franklin Resources (BEN.N) over a sale, the sources said. But on Tuesday it showed Black the door as it announced it would raise $300 million of capital instead.

The timing of Black's departure raised questions about the company's description of the parting as "mutually agreed" and "very amicable."

The episode also hinted at a possible a wave of consolidation in the asset management industry, which has been under pressure in the wake of the U.S. equities market meltdown last year.

The sources said rival fund management companies Mass Mutual and Franklin Resources were the leading bidders for Janus. An offer from Mass Mutual for about $14 a share fell through, but Franklin Resources was willing to pay about $13.50 a share in an all-share deal, the sources said.

Janus shares, which initially fell after the announcement of Black's departure and the plan to raise capital, rose 2 percent to close at $11.39 after earlier rising as much as 7 percent.

"The board appears to have rejected numerous proposals that would have provided significant economic advantage to shareholders in the interest of fulfilling a long-term strategic plan," said Don Putman, an investment banker close to the company.

Several members of Janus's board declined to comment and referred questions to the company. Janus spokeswoman Shelley Peterson said Black departed because he and the board felt he had "largely achieved his goals."

Janus Chairman Steve Scheid declined to elaborate during a conference call on Tuesday on the circumstances surrounding the departure of Black, who joined the company in January 2006. Scheid, who was CEO of Janus from 2004 to 2006, did not return messages seeking comment.

Janus has appointed Tim Armour, a Janus director and former president of Stein Roe Farnham's mutual fund unit, as interim CEO.

BOARDROOM POLITICS

It was unclear how popular with shareholders the decision to pass up on a potential takeover will be, but Charles Bobrinskoy, the director of research for Ariel Investments, which owns about 12 percent of Janus, said the company still has "a lot of upside," giving it an intrinsic value of $15 a share.