Silver lining for Liontrust as share price drop slices £50m off Majedie takeover

FTSE 250 fund manager’s shares have tumbled over 45% since December

Liontrust’s acquisition of Majedie Asset Management will come in significantly under estimate when it completes on 1 April, after the FTSE 250 fund group’s share price tumbled in the months after the deal was announced.

On 7 December, Liontrust said it would pay a maximum of £120m for its rival, comprising a share issuance worth up to £97m plus £23m in cash paid to shareholders.

On the day the deal was unveiled, its share price closed at £23 per share. On 29 March, it opened at £12.42, representing a drop of 46%.

The challenged performance means the issuance of 3.68 million new shares will come in considerably under budget at £45.6m – making an effective cost saving of £51.4m.

See also: Majedie’s value plunged 19% ahead of Liontrust deal

A Liontrust spokesperson confirmed to Portfolio Adviser that there is no change to the £23m cash payment to be made to Majedie shareholders.

Once completed, Liontrust’s share capital will consists of 64.9 million ordinary shares with voting rights.

Obvious overlap in UK funds

After buying Neptune and Architas’ UK business in recent years, Liontrust’s acquisition of Majedie came as something of a surprise as it had not been touted as a potential takeover target, AJ Bell’s Ryan Hughes said at the time.

The deal has not been without its detractors, however, specifically with regard to the “obvious overlap” in UK funds and what that means for investors in Majedie’s three UK-focused strategies, all of which have experienced redemptions since the deal was announced.

Majedie AM Fund Size as of Feb 22 Size as of Dec 21
UK Equity £894m £949.9m
UK Focus £399m £522m
UK Income £64m £70.8m

From April, these strategies will be housed alongside Anthony Cross and Julian Fosh’s range at Liontrust, which includes the £5.7bn Special Situations and £1.4bn UK Smaller Companies funds.

About the author


Latest Stories