Liontrust’s £96mn bid to buy Gam has failed, with the Swiss company now starting discussions with the rebel investor group which lobbied against the deal.
This morning (August 24) Liontrust revealed 33.5 per cent of Gam shareholders voted for its proposed deal meaning the company was unable to win the support of the majority.
Liontrust chief executive John Ions said: “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.”
Gam has now entered into “constructive and productive discussions” with representatives of the investor group NewGame, including Rock Investment SAS, Newgame SA and Bruellan SA.
These discussions are focused on agreeing short term bridge financing which was offered by Rock Investments on August 18.
The Swiss firm said NewGame has recognised the need to ensure that Gam has appropriate and adequate financing to continue as a going concern.
David Jacob, Gam's chairman, 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.”
Gam faces large losses, posting a loss before tax of £21mn for the first six months of 2023, and it expects to need a capital injection of around £90mn.
The company has also seen its assets under management fall to £61bn at the end of June compared to £75bn the year previously and £89bn at the end of 2022.
Liontrust had made financing available to Gam through a loan facility of £9mn, while a second would have been made available on completion of the deal had this happened.
But the Liontrust offer for Gam had come up against opposition for several months - in particular from the NewGame investor group which owns about 9 per cent of Gam.
Since May the asset manager has faced considerable resistance to its acquisition attempt, with rebel Gam shareholders attempting to block the deal and launching their own partial cash counter offer in July.
In a statement following Liontrust's failure to win shareholder support, the NewGame investor group said: "The failure of Liontrust's offer means focus must now shift towards the successful turnaround of Gam. Moving towards that goal, constructive discussions have begun with Gam about adequate financing and organizing an extraordinary general meeting to renew the board.
"NewGame is looking forward to engaging with all stakeholders at Gam, in particular fund management teams, clients and distributors with the support of Gam's board and senior management."
Gam 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.
Tim Haywood, who ran Gam’s Absolute Return Bond funds, was suspended in July 2018, eventually being fired and his funds closed down.
Gam's then-chief executive Alexander Friedman stepped down and the Financial Conduct Authority fined the company £9.1mn in 2021 over conflicts of interest.
Today Ions said that Liontrust made a fair offer for Gam which reflected the financial reality of the business.
“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,” Ions said. “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.”
Some analysts told FTAdviser yesterday that Liontrust had “messed up” the Gam takeover.
They also said it would be a “chastening experience” for the company.
But Liontrust stood by the acquisition at the time, saying: “The proposed acquisition of Gam gives us the opportunity to accelerate Liontrust’s strategic development by expanding the product range, the physical footprint of our distribution and talent across the company.”
amy.austin@ft.com
