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Liontrust's GAM Takeover Bid Wobbles; GAM In "Constructive" Talks With Investor Group

Tom Burroughes

19 September 2023

(Updates with brokerage comment, share price reaction)

, today said it noted that Liontrust’s tender offer is expected to be declared unsuccessful on 29 August. 

Liontrust’s takeover move for GAM, announced in April, has been a contentious process, drawing fire from investors who challenge the price and logic of the deal. One of those investor groups is “Newgame,” led by French billionaire Xavier Niel, which includes Rock Investment SAS, Newgame SA and Bruellan SA. GAM said in a statement today that it has entered “constructive and productive discussions” with representatives of Newgame.

The tussle with shareholder groups over the proposed takeover is an example of how, at a time of rising interest rates and challenging financial markets, a busy M&A trend in the European wealth and asset management space has become more difficult.Shares in GAM were up 1.66 per cent around 10:49 Swiss time today, at SFr0.46 ($0.52) per share. They have, however, fallen from SFr0.94 per share since the start of January, having briefly rallied in early May on Liontrust's proposed takeover. Five years ago, on 24 August, 2018, they fetched SFr8.61 per share. GAM has been battling to recover since Tim Haywood, who managed the ARBF business, was suspended in 2018 amid claims of misconduct (he was subsequently dismissed). Clients pulled money out of the firm. GAM was also hit by the selloff in global markets during 2022. It reported interim 2023 financial results here.

Shares in Liontrust soared in early morning trade and were up around 11.5 per cent as mid-morning, yesterday, at £672.12 per share. Since January, they have slid by 41.96 per cent.

"The failed tender offer for GAM de-risks the Liontrust investment case. Its shares have been significantly impacted by fears over GAM and we believe they should now rally. We set a 790p target price and upgrade our recommendation from Under Review to Buy," Peel Hunt, the UK broker, said in a note about GAM. "In our view GAM would have brought significant execution risks but uncertain financial benefits given continuing falls in its AuM." As for Liontrust, it said a "refocus" onto organic growth prospectis highlights the issues Liontrust faces, as shown by a recent AuM uypdate for the three months to end-June, showing that assets under management fell 6.1 per cent to £29.5 billion, including outflows equal to 5.2 per cent of opening AuM. "Industry flows remain problematic for now so a recovery in profits is unlikely to occur in the short term in our view," it said. 

Short-term bridging
“These discussions are focused on agreeing short-term bridge financing which has been offered by Rock on 18 August 2023,” GAM said in its statement. “In addition, Newgame has recognised the need to ensure that GAM has appropriate and adequate financing to continue as a going concern.”

“The GAM Board acknowledges that the majority of our shareholders have not found the Liontrust Offer compelling. I am pleased that we have entered constructive and productive discussions with Newgame and that these discussions continue at speed,” David Jacob, chairman of the GAM Holding, said. 

In its statement to the London Stock Exchange today, Liontrust said that as of the end of the extended main tender offer period on 23 August, and based on preliminary figures, a total of 53,250,357 GAM shares were tendered, equating to 33.45 per cent. “Based on the provisional interim result…the offer condition on the minimum acceptance level of the offer is not satisfied,” it said. 

Earlier this year, Rock Investment SAS asked GAM to consider firing its board and make other changes ahead of the proposed takeover. On the other hand, in July GAM’s largest investor Silchester said it supported the Liontrust offer and said it would tender its shares representing about 17.3 per cent of GAM’s share capital.

“GAM Holding board of directors notes the interim results of the Liontrust Asset Management tender offer and the expectation that they will declare it unsuccessful on 29 August 2023,” GAM said.

“Newgame will embark on immediate discussions with GAM portfolio management teams to ensure that they have a full understanding of Newgame’s business plan and their aspirations for making GAM a success. In addition, Newgame recognises that GAM is built on its clients and their confidence in GAM’s ability to deliver its investment teams, client servicing activities and a stable future,” GAM said. 

GAM said it “recognises the importance of GAM shareholders determining a change in the GAM Board composition and looks forward to receiving the Newgame proposals for a future extraordinary general meeting.” 

The talks with Newgame are expected to conclude “shortly,” it said, adding that it appreciated the patience of shareholders.