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GAM has made a fresh attempt to assuage shareholder concerns over its takeover offer from UK asset manager Liontrust that it says is essential to its survival.
A day ahead of its results announcement, in which it is expected to confirm a SFr23mn ($26.2mn) loss in the first half, the Swiss investment house laid out its responses to a group of shareholders balking at Liontrust’s offer, reiterating that the deal is essential “to continue as a going concern”.
The move forms the latest in a series of efforts by GAM in recent months to convince any holdouts to accept Liontrust’s offer, which is facing a mounting challenge from an investor group, which includes Newgame and wealth management company Bruellan.
Time is running out before Liontrust’s twice-extended August 4 deadline to seal the deal it outlined in May. Barring a last-minute delay to GAM’s scheduled results, Thursday could provide the 40-year-old investment house — one of the largest in Europe before it stumbled in to scandal in 2018 — with a final opportunity to push the deal over the line.
“Newgame’s proposals ignore business realities and do not provide a credible path forward,” GAM’s board said in a statement last week. “They do not provide the required immediate funding and materially underestimate the scale of funding needed to restructure the business and to support it as a going concern. Liontrust is the only viable option.”
Portfolio managers at GAM have also voiced support for the deal, while Liontrust’s chief executive John Ions has warned the clock is at “one minute to midnight” for GAM’s future.
GAM has struggled to recover from its involvement in the Greensill scandal — an episode that led to the ejection of one of its star managers, a fine of £9.1mn over conflicts of interest, and a 96 per cent collapse in its share price.
London-listed Liontrust, which has snapped up seven smaller asset managers in 11 years, stepped forward with a proposed acquisition in May — a move swiftly recommended by GAM’s board and its fund managers. As part of the offer, Liontrust extended a £17.8mn loan to GAM, half of which has already been paid, in an arrangement that will be terminated at the end of the year if the deal has not been completed.
It is offering 0.06 of its own shares for each share in GAM, which now trades at SFr0.53, and last week it extended the deadline for its tender offer for GAM’s shares to Friday. It also removed a clause that required GAM’s fund management services business to be sold for the deal to go ahead, and issued a second show of support from GAM’s fund managers. “The acquisition is Liontrust’s full and final offer,” the company said in a statement.
But Liontrust and GAM face resistance from activist investors led by French telecoms billionaire Xavier Niel, who say they own 9.6 per cent of GAM’s shares. They have said the proposal significantly undervalues the company and the potential value a turnaround could generate for shareholders, and have launched their own offer for 17.5 per cent of the company at SFr0.55 per share.
Newgame chief Albert Saporta told the Financial Times that he had received calls from GAM shareholders “every day” saying they are not going to accept Liontrust’s offer.
“It is presumptuous and arrogant for Liontrust’s management to think only it can create value for shareholders . . . the deal is obviously not very popular,” he said. Newgame has also said the loan from Liontrust means GAM is recommending an offer made by “the creditor of last resort . . . with a pistol [to] the head”.
It has described the proposed deal as “lopsided”, given GAM shareholders would own 12.6 per cent of the combined entity, despite contributing about 40 per cent of the assets under management.
Newgame’s offer came, GAM said, with “a highly questionable condition that Newgame gets full control of the GAM board. It also requires change of control approvals from various regulators.”
It is unclear how many of GAM’s shareholders plan to commit to Liontrust’s tender offer. One external shareholder — Silchester, which holds 17.3 per cent of GAM’s shares — has publicly voiced its support.
“I acknowledge that this has been a challenging journey for shareholders,” said GAM chair David Jacob in last week’s statement. “However, at this critical point, I urge you to tender your shares into the Liontrust offer.”
