GAM acquisition saga continues as Rock Investments proposes new alternative to Liontrust deal

Liontrust conditionally agreed to acquire its Swiss competitor GAM Holding for £96 million in May; shareholders currently assessing the offer.

Liontrust Asset Management’s proposed acquisition of GAM is facing another hurdle as Geneva-based Rock Investments proposes a new alternative to the asset manager’s bid.

Rock Investments has proposed a short-term bridge financing in the form of a CHF25 million convertible bond, to be used in the event that Liontrust’s offer for GAM Holding is not accepted.
The short-term bridge financing from Rock is planned to be presented at a future EGM and would reportedly replace their previously proposed bridge financing.

However, the financing option has been declared lacking by GAM in a statement made on Monday 21 August, which made clear that this amount represents around a quarter of the necessary input.

In response to the communication sent by Rock to the GAM board on 17 August, GAM has stated that “the proposed convertible bond is insufficient to maintain GAM”, explaining that a capital injection for the immediate foreseeable future would need to be in excess of CHF 100 million.

“Against this background, the proposed convertible bond is insufficient to maintain GAM […] in the short term let alone over the next 12 months as required by law and regulators,” said the business.

UK asset manager Liontrust conditionally agreed to acquire its Swiss competitor GAM Holding for £96 million in May, following murmurs of the deal in April.

If the transaction is successful, the new global asset management entity would hold £53 billion in assets under management (AUM) and administration, expanding Liontrust’s product range into fixed income, thematic equities and alternatives, as well as its overall presence across Europe. 

Following announcement of the proposed takeover, an investor group, made up of companies Newgame – controlled by Rock Investment – and Bruellan, which together control 9.6% of GAM Holding, stated that it was contemplating rejecting the offer.

The group has continually expressed that it believes the offer from Liontrust fundamentally undervalues the GAM business. It has previously filed two official objections to the Swiss Takeover Board (TOB) concerning the Liontrust offer thus far.

The most recent announcement from GAM on Monday reiterates the board’s preference for the Liontrust takeover. 

Speaking to shareholders earlier this month, David Jacob, chair of GAM, said: “I acknowledge that this has been a challenging journey for shareholders. However, at this critical point, I urge you to tender your shares into the Liontrust Offer. By doing this, you protect your investment and have the opportunity to participate in the future value creation from the enlarged firm.”

In a statement this week, GAM once again asserted that the Liontrust offer is the only viable option and in the interests of all stakeholders.

“Liontrust have done extensive due diligence and the enlarged business will have a strong balance sheet, a broader array of excellent investment products, a global distribution footprint and the capability to deliver synergies and growth.”

The newest deadline for shareholders to tender their shares into the Liontrust offer is 23 August 2023.

In the same communication, GAM also addressed Rock directly, urging the business to accept the realities of GAM’s financial position: “If the Liontrust offer is declared unsuccessful it is essential that Rock acknowledge and accept publicly that the level of funding needed to stabilise GAM is significantly higher than the net proceeds of the Rock proposed convertible bond.

“[…] failing to do so is not reflective of GAM’s actual financial position and business performance and is misleading to GAM and its shareholders.”

The Newgame and Bruellan investor group and Liontrust Asset Managament both declined to comment when approached by The TRADE.

GAM Holdings did not immediately respond to a request for comment.