In a deal announced to the stock exchange this morning (May 4), Liontrust said it has agreed to acquire the entire issued share capital of Gam, a Swiss asset manager with a discretionary fund management arm in the UK.
Liontrust expects to realise cost savings of £57mn, through a reduction of duplicate administrative costs, and other cost rationalisations, and it said the acquisition will cost £11mn in transaction costs.
Liontrust will offer 0.06 Liontrust shares for each Gam share, issuing 9.4mn new shares in Liontrust for the purposes of the transaction.
The deal represents a 16 per cent discount to Gam’s latest closing share price, and is expected to complete in the final quarter this year, subject to regulatory approval.
Liontrust’s chief executive John Ions said the acquisition will “accelerate the growth” of Liontrust through enhancing distribution, product capability, and investment talent.
“We have been impressed by the quality of the investment teams at Gam,” he said, adding that the firm is committed to the international business and client relationships that Gam has built.
Peter Sanderson, chief executive of Gam, said: “The resulting business will have a strong balance sheet, a broader array of excellent investment products, and a global distribution footprint from which to deliver growth that our shareholders can participate in the future."
Liontrust will retain the investment and distribution teams from Gam and will rebrand all Gam’s funds as soon as possible.
The wider Gam business will also operate under the Liontrust brand.
Gam had previously delayed its 2022 results to give it more time to agree a deal, and Liontrust confirmed last month it was in discussions to acquire the company.
Gam posted a post-tax loss of Sfr290mn (£261mn) in 2022, and assets under management dropped from Sfr99bn at the end of 2021 to Sfr75bn a year later.
The company has seen its share price crash 96 per cent in the last five years after one of its star fund managers was caught up in the Greensill scandal, where a supply chain business advised by former prime minister David Cameron collapsed.
Liontrust has also suffered with a declining share price, which has crashed 28 per cent in the past 12 months, including a 3.6 per cent drop this morning.
Analysts at Numis said they had “strong reservations” about the deal, which they said is complicated and complex, given the ongoing losses, multi-geographical nature, and the need to close the administration business.
The restructuring costs are “looking low”, Numis said, and the deal “risks management being distracted from the existing business for some time”.