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Liontrust and GAM Shares Rise as Deal Founders

Liontrust Asset Management won the support of only a third of the Zurich-based firm’s shareholders, half of the amount required.

Liontrust Asset Management on Thursday said it expects to declare its offer to buy GAM Holding AG unsuccessful, after winning the support of only a third of the Zurich-based firm’s shareholders.

The minimum acceptance condition for the bid was just over 66%, according to an earlier offer document, so the FTSE 250 listing fell well short of the support needed.

Liontrust currently expects to declare the offer unsuccessful on Tuesday next week. GAM shareholders had until Wednesday of this week to tender shares.

Liontrust announced an all-share deal to acquire GAM in May, at the time valuing the company at 107 million Swiss francs, around £96 million. Liontrust said the offer was equivalent to SFr0.67 per share. GAM shareholders would have just shy of a 13% stake in the enlarged firm.

GAM shares rose more than 10% in early trading on Thursday morning. It has a market capitalisation of SFr79 million. Liontrust shares also rose, gaining more than 9% to £6.60.

Liontrust chief executive John Ions said: “Liontrust made a full and fair offer for GAM, which reflected the financial reality of the business and would have provided a certain and sustainable solution. Throughout this process, Liontrust has sought to create corporate and financial stability for GAM and do what is in the best interests of its shareholders, clients and employees. We have always believed that Liontrust’s offer and strategy for ensuring the growth of the combined group is the best way to achieve this.

“We are disappointed we did not win the support of the majority of GAM’s shareholders and are grateful to those GAM and Liontrust shareholders who did back our offer. We also thank everyone at GAM for working so hard to make our offer succeed. We hope that GAM is able to achieve a positive outcome for the business.”

The Back Story

The sternest opposition to the Liontrust buyout of GAM came from French telecommunications billionaire Xavier Niel, through NewGAMe. NewGAMe is controlled by Rock Investment, which is itself owned by NJJ Holding, Niel’s personal holding company. NewGAMe, alongside Geneva-based wealth manager Bruellan, back in May said Liontrust’s offer undervalued GAM.

NewGAMe and Bruellan, which own 9.6% of GAM, announced a public offer to acquire another 17.5% of the company at SFr0.55 per share in cash.

The opposition at times descended into a feud between Liontrust and NewGAMe. On Wednesday, NewGAMe said Liontrust grew “more desperate by the day”.

It also accused Ions of “more and more aggressive tactics which are bordering illegality”.

“Yesterday, John Ions, through David Boyle, head of corporate development at Liontrust, sent an email to a number of GAM shareholders inviting them to have a talk with John Seo, the managing director and co-founder of Fermat Capital. Fermat Capital is a major external manager of GAM. In his email, John Ions argues that shall NewGAMe end up taking control of GAM, Fermat would seriously consider terminating its relationship with GAM, particularly as John Seo wouldn’t do business with people ‘he does not trust’,” NewGAMe said in a statement on Wednesday.

NewGAMe said Seo denied writing those words.

Liontrust believed plans by NewGAM for GAM were “so long on rhetoric and so short on detail”.

It is now NewGAMe and Bruellan that Zurich-listed GAM will turn to. GAM has entered into “constructive and productive discussions” with the investor group with the hope of sealing short term bridge financing.

GAM chair David Jacob said: “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.”

For Liontrust, it is back to the drawing board. It also noted that it would book £11 million in one-off exceptional costs due to the failed takeover of GAM. This will stem largely from corporate finance, extended legal expenses and accountancy services.

Ions added: “GAM presented the opportunity to accelerate Liontrust’s strategic objectives. While this is not the result we wanted, our strategy will not change, with a continued focus on expanding distribution and the client base, diversifying the product range, attracting talent and enhancing the investor experience.

“The financial health of the Liontrust business, power of our brand, excellent investment teams and strength of sales and marketing gives me great confidence we will achieve these objectives.”

GAM has struggled in recent years, worsened by turmoil of supply chain finance firm Greensill Capital. GAM in March 2021 closed the GAM Greensill Supply Chain Finance fund to subscriptions and redemptions as a result.

Before that, it ousted one-time investment director business unit head Tim Haywood head in February 2019 following a probe into misconduct.

The UK Financial Conduct Authority in March 2022 said it fined GAM International Management £9.1 million for “failing to conduct its business with due care and attention” and not properly managing conflicts of interest.

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