Is Liontrust a target for M&A? Stock upgraded to ‘buy’ in wake of GAM offer collapse

Peel Hunt analysts said further deals could be possible with Liontrust as ‘predator or target’

Photo by Kelly Sikkema on Unsplash


Research firm Peel Hunt has upgraded Liontrust from an ‘Under Review’ rating to a ‘Buy’ in the wake of its failed bid for GAM.

Analysts said that the failed offer “de-risks” the investment case for Liontrust.

The team noted the asset manager’s share price had been “significantly impacted” by fears over the GAM acquisition and believe it should now rally.

Peel Hunt added: “In our view, GAM would have brought significant execution risks but uncertain financial benefits given continuing falls in its assets under management. Strategic issues arise; further M&A is possible with Liontrust as either predator or target.”

“Management has signalled its willingness to undertake large, complex acquisitions in the context of its desire to diversify the business away from its current over-weighting of UK retail investors and equities.”

“There is a risk, in our view, that further M&A could follow. Conversely, the fall in Liontrust’s shares and currently low valuation multiples could render it as a target for others.”

See also: Liontrust’s takeover of GAM falls through after final deadline

GAM enters talks with investor group

Meanwhile, GAM has entered talks with investor group NewGAMe following the collapse of Liontrust’s offer.

Liontrust required 66.7% of GAM shares to be tendered by yesterday’s deadline for its offer to proceed, but only received support from 34% of shareholders.

NewGAMe and Bruellan tabled a partial cash offer for 28 million GAM shares at a 29.1% premium in July and has repeatedly called for GAM’s board to be replaced.

The investor group said: “The failure of Liontrust’s offer means focus must now shift towards the successful turnaround of GAM. Moving towards that goal, constructive discussions have begun with GAM about adequate financing and organising an extraordinary general meeting to renew the board.

“NewGAMe is looking forward to engaging with all stakeholders at GAM, in particular fund management teams, clients and distributors with the support of GAM’s board and senior management.”

See also: Liontrust CEO accused of spreading ‘false rumours’ which ‘border illegality’ ahead of GAM offer deadline

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