Liontrust faces battle with GAM investors over ‘unfair’ £96m takeover swoop
London-listed fund manager Liontrust is facing a battle with a group of GAM shareholders and a potential challenge from regulators after it swooped to takeover the Zurich-based asset manager last week.
Liontrust revealed it had struck a £96m deal to buy its former rival GAM on the 4th May as it continues an acquisitive push under chief John Ions.
However, the deal is now facing a formal challenge after an investor group made up of NewGAMe and Bruellan, which together own 8.4 per cent of GAM, said the terms of the deal ran against Swiss takeover laws.
“The Group is calling for the removal of a key condition of Liontrust’s announced exchange offer which would allow Liontrust to withdraw its offer if a proposed exit of GAM’s fund management services business is not achieved,” the investors said in a statement today.
“This condition makes the offer unfair to GAM’s shareholders, needlessly favours the bidder and is contrary to the principles of Swiss takeover law.”
The investors claim the terms of the deal would allow Liontrust to “profit from the upside of a potential sale while suffering none of the consequences of a failed divestiture”, which they say GAM’s shareholders would bear in full.
Liontrust and GAM declined to comment. FINMA, the Swiss regulator, did not respond to a request for comment.
The pushback may prove a speed bump for Liontrust’s takeover of the firm, with the timetable of the deal and certain exemptions granted to Liontrust also set to be challenged by the GAM investors.
Shareholders have been given until the 11th August to greenlight the deal, but investors may not receive the exchanged Liontrust shares until the end of the year, the investors said, leaving them in limbo until the completion of the deal.
Analysts also voiced concerns over the deal last week. David McCann, an analyst at Numis said he had “strong reservations” over the deal due to hefty deal costs – expected to come in higher than the £45m previously expected, the Financial TImes reported.
The potential rebellion comes despite GAM’s board recommending the deal to shareholders last week after a torrid five years in which it has haemorrhaged flows and seen a collapse in its share price.
GAM was rocked by a scandal in which its chief stepped down following the suspension of one of its top fund managers.