NewGAMe and Bruellan, the investor group opposing Liontrust’s proposed takeover of GAM, has stepped up its efforts to scupper the deal.
The group today published an ‘investment thesis’ laying out why it believes the asset manager is worth double the CHF 107m (£94m) Liontrust offer, which should therefore be dismissed.
The latest move in what has become a saga follows the GAM board’s attempt yesterday to secure backing for the deal. In a presentation available on GAM’s website, the board urged shareholders to accept the offer and insisted they would receive a “fair proportion of the combined business”.
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NewGAMe is a Geneva-based company owned by a number of investors and controlled by Rock Investment, a French-incorporated entity owned by NJJ Holding, the personal holding company of billionaire Xavier Niel.
Bruellan is a wealth manager with a presence in Geneva, Lausanne, Crans-Montana and Verbier. Together they own 9.5% of GAM.
The NewGAMe investment thesis sets out what it claims is a ‘clear restructuring plan’ to achieve a turnaround and value creation of between three and five times the current level over the next two to three years.
The thesis centres on a four-stage approach. First investors would inject CHF 25m of new capital via a convertible bond. Then the business would be stabilised by appointing a new management team and board with significant ‘skin in the game’.
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Thirdly, the investors propose to restructure GAM to align its costs with its current assets under management. The fourth step would be to return GAM to growth by changing the funds mix, focusing on UHNW investors and rebuilding its alternatives and wealth management businesses.
NewGAMe and Bruellan also reiterated their critique of the Liontrust offer in its own terms. They said it is a ‘lop-sided deal structure’ which would mean GAM shareholders own only 12.5% of the combined entity while contributing 40% of the AUM.
They added that the terms undervalue GAM despite the deal being “immediately accretive” to Liontrust, with GAM’s EBIT margins expected to reach 30% by 2025. The investors also criticised Liontrust’s track record and share price performance.
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Antoine Spillmann, CEO and partner at Bruellan and the group’s proposed candidate for chair of GAM’s board, said: “We believe Liontrust’s offer significantly undervalues GAM and does not reflect the upside that a successful turnaround can generate for all stakeholders.
“We have identified a top team to lead the turnaround and urge GAM shareholders not to tender to the dilutive and value-destructive Liontrust offer.”
Liontrust declined to immediately comment.
