Liontrust’s concession of defeat in its pursuit of Swiss fund manager GAM this morning brought to a close one the more dramatic takeover attempts in recent times; one involving a French tycoon, underhand emails and accusations of near-illegality.
Here’s a look at where it all went wrong.
Liontrust’s takeover bid
GAM was looking for a route to safer hands because of the dire straits it found itself in. The firm has been reeling for the past five years over a scandal involving its former star fund manager Tim Haywood, who was found to have accepted gifts from collapsed supply chain finance outfit Greensill Capital without declaring them to the powers that be.
The scandal triggered the downfall of chief Alexander Friedman and the firm has been haemorrhaging cash since.
Assets under management have cratered by more than half in the last five years to just CHF68bn at the end of June, while its share price has plunged nearly 95 per cent during that period. The scandal led to GAM being slapped with a £9.1m fine in 2022 and while Haywood was hit with a £230,000 bill.
Liontrust, however, saw an opportunity, and its much rumoured talks materialised in a £96m swoop in May.
A thorn in the side
However, a group of rebel GAM investors, known as NewGAMe, have had different ideas from the start.
NewGAMe said the bid undervalues the firm and contained a clause on the disposal of the fund management services business, which it said could harm shareholders.
After a bruising back and forth, Liontrust agreed to scrap the clause and extend the takeover deadline by three days.
GAM, however, has continued to back the Liontrust bid through. In a recent shareholder missive, GAM chair David Jacob wrote: “I am writing to urge you – in the strongest possible terms – to tender your shares as soon as possible to secure a future for GAM and your shareholding.”
This week however, NewGAMe ramped up its attack.
NewGAMe accused Liontrust chief John Ions of tactics “bordering illegality” after he emailed GAM shareholders saying a key fund manager would not work with them.
“John Seo [Fermat Capital CEO] has also questioned the integrity of NewGAMe, and, having suffered long enough (as you have) with GAM executive management, is in no mind to lunge straight into a relationship with people he does not trust,” Ions wrote to shareholders.
After the deadline for a deal closed this week, with only a measly 33 per cent in favour of the deal, Liontrust’s pursuit has now crashed into the dust.
NewGAMe appeared to be rubbing its hands, saying shortly after the news broke that it was “looking forward to engaging with all stakeholders at GAM”.
While Fermat’s Seo firmly rebutted Ion’s claims of dissent, a letter on the 20th July to GAM management shows he was among a long list of senior fund managers to firmly back the Liontrust takeover.
The scale of support for the Liontrust bid from fund managers may mean that a harmonious co-working relationship between NewGAMe and the firm’s investment gurus is a more uphill battle than they’re letting on.
What happens now?
Both GAM and NewGAMe have made diplomatic noises towards each other since the failure of the Liontrust deal.
NewGAMe said “constructive discussions have begun with GAM about adequate financing” and it was organizing an extraordinary general meeting to renew the board.
Much may therefore hinge on the package that NewGAMe can cough up.