Xavier Niel’s GAM raid looks less quixotic

Gam Holding AG

18/07/2023 11:57

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
       LONDON, July 18 (Reuters Breakingviews) - An investor
group contesting the takeover of ailing fund manager GAM
 GAMH.S  by UK rival Liontrust Asset Management  LIO.L  is
finally getting serious. NewGAMe, whose backers include telecoms
mogul Xavier Niel and Swiss wealth manager Bruellan, launched a
tender offer for just under 18% of GAM’s shares. It’s enough to
throw a serious spanner in the works for the merger.
    Liontrust’s offer looked like the least bad option for GAM,
which is losing money as its assets have more than halved since
2018 to 68 billion Swiss francs. And despite opposing the deal,
NewGAMe had yet to offer investors an alternative option. But
the value of Liontrust’s offer has fallen due to its own
dwindling share price and shrinking asset pool from 67 cents per
share in May, or 107 million Swiss francs, to just over 40
cents. NewGAMe is now offering 55 cents to buy 17.5% of GAM’s
shares. That would give it a 27% holding. And at least one other
investor, with 6.5%, has said it won’t accept Liontrust’s offer.
    That means Liontrust will probably struggle to get to the
two-thirds vote it would need to take over GAM. It could accept
less than that, but would then not be able to consolidate the
target. NewGAMe’s alternative is still risky: it, and
shareholders, will need to fund a tricky turnaround amid losses,
and repay Liontrust’s emergency loan to GAM. But GAM also has
over 2 billion Swiss francs of tax losses to carry forward,
lowering any future tax burden. That’s a lot of reasons to
reject the deal. (By Neil Unmack)
    
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 (Editing by Aimee Donnellan and Oliver Taslic)
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