‘Governance horror-show’: AVI hits out at takeover plan from Dan Loeb-backed Third Point
A major shareholder of a London-listed business backed by New York hedge fund manager Dan Loeb has hit out at its planned takeover of a US insurer.
AVI, which controls a 7.1 per cent share of Third Point Investors, described its takeover proposal as a “governance horror-show”.
“Third Point Investors has for some time been the poster child for appalling corporate governance and today’s announcement of an odious related-party deal thoroughly cements that well-deserved reputation,” AVI said.
“Long suffering shareholders who’ve endured the Manager’s persistent record of underperformance now face being dragged into Third Point’s latest costly misadventure into insurance.”
“Compounding this governance horror-show, we note the chairman of the strategy committee that has recommended this transaction to the board, will be chairing the new business.”
Third Point Investors declined to comment on AVI’s remarks, but company sources pointed out that an independent member of the firm’s strategy committee, who oversaw the plans, was appointed on the recommendation of AVI.
Another major shareholder, Saba Capital, said it was supportive of the plan. Boaz Weinstein, Founder or Saba Capital Management, said: “We’re pleased to see a board of directors responding to the inherent challenges within the UK investment trust market with an innovative and transformative solution.
“As TPIL shareholders, we believe this transaction creates a clear path to value creation and plan to support it.”
Third Point Investors shares fell as much as six per cent in early London trade.
Third Point’s ‘Unique and innovative opportunity’
Third Point’s proposal, which was unveiled to markets on Wednesday, involves a sale and purchase agreement to acquire Malibu Life Reinsurance SPC, a reinsurance platform focused on the US fixed annuity market.
It follows a “strategy review” by the company to “consider how the company may best deliver value to shareholders going forward.”
Malibu is targeting to scale to approximately $5 billion in annual premiums by the end of 2027 through execution of a spread-based business model, Third Point said.
“This unique and innovative opportunity facilitates an orderly transition of the company’s current investment strategy into a fully capitalised, London-listed, reinsurance operating company,” the firm added.
Third Point said it was considering a tender offer of $75m as part of the proposal, adding that it expected to contribute a further estimated $15m of equity capital to Malibu during the second quarter of the year.
A shareholder vote to approve the takeover deal is expected in July.