Row over Liontrust’s GAM takeover intensifies

A group of minority shareholders of GAM has doubled down on its opposition to the acquisition of the Swiss fund manager by London-listed Liontrust.

The deal, which values ​​GAM at around 107 million francs (£94 million), has previously been criticized for, among other things, “undervaluing” the group.

NewGame and Bruellan, which own 9.5 percent of GAM’s stock, addressed their opposition to the deal on Wednesday, drafting a four-part plan that the investors claim will increase its value by “3x-5x in the coming months.” two to three years’. .

They would also see GAM’s current management and board be fired and replaced with alternatives that keep “skin in the game.”

The pair urged co-investors to block the acquisition, denouncing a “one-sided deal structure where GAM shareholders will own only 12.5 percent of the combined entity and 40 percent of the [assets under management]’.

FTSE 250 Liontrust had £31.4 billion in assets under management as of June 20, while GAM had CHF 71.7 billion (£62.3 billion).

NewGame and Bruellan said the terms of the deal “undervalued” GAM, “despite the deal immediately contributing to Liontrust.”

They also criticized Liontrust’s “track record as one of the worst-performing stocks in the fund management industry over the past 12-24 months.”

Liontrust Shares have fallen by about 1 percent in a year.

London-listed rivals Abrdn, Schroders and M&G, for example, added 35.3, 0.7 and 0.8 per cent over the same period.

Finally, the investors said Liontrust has a “track record of value-destroying mergers and acquisitions,” highlighting the performance of eight City companies bought by the group between 2011 and 2022, including Neptune and Architas.

They said, ‘Liontrust has closed eight major deals in the last 12 years. According to Numis, 7 out of 8 of these acquisitions were value-destroying.

No wonder Liontrust has been one of the worst-performing stocks in its peer group over the past 12 and 24 months, significantly underperforming the FTSE 250 index over the same period.

This is Money has contacted Liontrust for comment on these points.

The investors also published a “thesis” outlining “several reasons why shareholders should not accept Liontrust’s offer and GAM is today valued at more than double the offer of Liontrust.”

Their GAM turnaround plan includes raising CHF 25 million (£22 million) through the issue of a convertible bond, and appointing a new leadership team and board ‘with significant skin in the game’ – or money invested in the company.

They would then “restructure” GAM to “align the cost structure with current AUM,” and grow the group back “by changing the fund mix, focusing on [ultra-high-net-worth] investors and rebuilding its alternatives and asset management business.”

NewGame and Bruellan said: “The investor group has submitted its legal application to the UK Financial Conduct Authority to be allowed to hold more than 10 per cent in GAM and is preparing to do the same in other relevant jurisdictions and is awaiting [Swiss regulator] FINMA’s decision.’

Antoine Spillmann, CEO and partner at Bruellan and the investor group’s proposed nominee for Chairman of the Board of Directors of GAM, added: “We believe that Liontrust’s offer significantly undervalues ​​GAM and does not reflect the benefit that a successful turnaround for all stakeholders.

“We have identified a top team to lead the turnaround and urge GAM shareholders not to accept Liontrust’s dilutive and value-destroying offer.”

Liontrust shares have been volatile over the past year