Liontrust offer for GAM declared ‘unsuccessful’ as asset manager extends immediate short-term financing

The current GAM board is set to stand down at the upcoming Extraordinary General Meeting (EGM), with new directors to be proposed.

The board of GAM Holding has announced that Liontrust Asset Management’s offer for the business has been unsuccesful and an agreement made with Rock Investment SAS and Newgame to finance the business’ liquidity needs.

NJJ Holding-owned Rock is part of an investor group, also consisting of companies Newgame and Bruellan, which controls 9.6% of GAM Holding.

The agreement specifically relates to an extension of the previously proposed immediate short-term financing of CHF 20 million in order to cover GAM, which would remain until replaced by the CHF 25 million convertible bond proposed by Rock Investments last week.

Initially, the financing option was declared lacking by GAM in a statement made on Monday 21 August, which claimed the amount represented around a quarter of the necessary input.

However, the business will now move to finalise the proposed financing with GAM shareholders at an extraordinary general meeting held on or around 27 September.

The outcome follows significant back and forth around the Liontrust and GAM deal over the last three months – which saw significant mudslinging between the Newgame group and GAM.

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

Speaking at the time the offer was announced, John Ions, chief executive of Liontrust, said: “We have made a good and fair offer for GAM and believe it is in the best interests of the shareholders of both companies, as well as clients and employees, by providing a great platform for growth along with corporate and financial stability for GAM.”

Supporting this, David Jacob, chair of GAM, at the time expressed the board’s recommendation that it be accepted by all shareholders. However, there was immediate backlash from some stakeholders.

Following the announcement of the proposed takeover in May, the Newgame and Bruellan investor group stated that it was considering rejecting the offer and believed there were better options which could turn the business around. 

At the time, the investor group stated that it believed the offer undervalued the GAM business, highlighting the fact that it was not a cash offer as a key drawback: “The fact that Liontrust only offers its own shares […] implies that GAM shareholders will be subject to the volatility of Liontrust shares without any firm price for a business that has significant intrinsic value.”

In addition, the group expressed concern related to the execution contingencies of the proposed deal – “the risk of an unsuccessful exit of GAM’s fund management services business in Luxembourg and Switzerland (on which almost no information is being provided) is being shifted to GAM shareholders,” said the investor group.

In recent months, the group has made various statements aimed at preventing the Liontrust takeover and has previously filed two official objections to the Swiss Takeover Board (TOB) concerning the Liontrust offer in the last two months.

In addition, the group also considered a partial public offer to purchase “up to” 28 million GAM shares – equating to around 17.5% of the issued share capital of GAM for CHF0.55 per share in a bid to halt the offer.

This latest development following the rejection of the Liontrust offer, will also see the current GAM board stand down at the upcoming EGM, with new directors proposed by Rock.

The investor group has confirmed to the current board “their intention to secure sufficient financial resources to fund GAM’s operations as a going concern”. In response to this, the board has stated a recommendation to shareholders to approve the proposed candidates.

Speaking to this latest development, Jacob, said: “I am pleased that we have successfully concluded our discussions with NewGAMe and entered into financing arrangements. This provides a clear path forward for GAM and stability for our clients, employees and all other shareholders. I would like to thank clients, employees and shareholders for their patience during the process of securing a strategic outcome for GAM.”