When will Liontrust stop trying to buy companies?
Liontrust has a problem – they can’t stop trying to buy companies.
Majedie Asset Management, Neptune Investment Management, the infamous failed takeover of GAM – and now Artemis.
Reports came out from the FT this week that Liontrust and Artemis had been in talks over an acquisition, which would have made it the eighth asset management company bought by Liontrust over the last 12 years.
When approached for comment, Liontrust told Morning Wire that it was not in talks with Artemis over the issue, though FT sources said that the negotiations had already stalled.
The most recent acquisition attempt by the company was GAM, which crashed and burned last year after GAM shareholders rejected the deal by a wide margin.
Liontrust’s offer received the support of only 33.45 per cent of GAM shareholders, just over half of the required 66.6 per cent.
Ben Yearsley, director of Fairview Investing, said that CEO John Ions had “got the strategy wrong” on attempting to buy GAM.
This was the first time Liontrust had tried to buy a listed company, he said, “and I don’t think they really got the complexity”.
Numis analysts David McCann went as far as saying at the time that there could be problems for the firm around “management credibility” due to the failed deal.
But even that disaster of an acquisition hasn’t killed their spirit to keep growing.
As well as buying a variety of asset management boutiques, Liontrust has also been poaching teams from other asset managers, most recently (and perhaps most cheekily) raiding the global equity team at GAM.
In an interview last month, Ions claimed that the desire to grow Liontrust “is still as strong”, adding that he “wouldn’t shy away” from another acquisition as big as GAM.
Darius McDermott, managing director of Chelsea Financial Services, said it was well understood that part of Liontrust’s aim was to grow through acquisitions.
While he said that most of their buyouts seemed to be have been successful, “it is also probably fair to say that the most recent one, which was Majedie, has been less successful”.
However, he gave particular praise to the strong sustainable investment team brought over from Alliance trust.
Yearsley agreed, saying there had been “some good deals in there, such as the Alliance Trust SRI team, and some more questionable ones”.
Nevertheless, the asset manager has shown no sign of stopping, especially with the news about Artemis this week.
“Although they have denied they are talking to Artemis, I would not be surprised if they make further acquisitions in the future,” added McDermott.
However, the fallout over the failed GAM bid has made Liontrust “vulnerable”, said Yearsley.
Since lots of the firm’s previous takeovers had been purchased through using its own shares, the 73 per cent crash in its share price since 2021 has hampered its ability to buy out new companies.
But that doesn’t seem to be stopping them from trying.