The bidding war for the Swiss fund company has opened a new front with a counteroffer from an activist investor group. Shareholders shouldn't forget that GAM is living on borrowed money.
For the first time, GAM shareholders are being spoiled for choice. Today, an investor group made up Newgame and Bruellan announced an offer for up to 28 million GAM shares, worth 15.4 million Swiss francs ($19.7 million).
The Group is offering a better price to Liontrust, which wants to acquire all outstanding shares through a share swap and subsequently integrate GAM into its business. The initial offer period for the Liontrust bid ends July 28.
NewGAMe and investors allied with the company oppose Liontrust's bid, favoring a turnaround.
Cash me Out
By becoming GAM's largest shareholder, the Group can keep it listed on the SIX Swiss Exchange, while shareholders wishing to exit the company get a cash payout.
Should GAM's owners accept the Newgame bid, it could be problematic. It's already living on a 20 million franc loan provided by Liontrust as part of its takeover bid and help when GAM's liquidity deteriorated last year.
Loan Can be Withdrawn
Last week GAM again reemphasized the importance of Liontrust's offer, which will be withdrawn if the deal doesn't go through. Should that happen, there would be a risk of immediate uncertainty for the business, GAM warned.
For investors still harboring long-term plans for GAM, that would probably be a dealbreaker. The company's operational functioning would be jeopardized, and the fund managers who make up the asset manager's real value will shope their talents elsewhere.
For GAM it would likely mean not «NewGAMe» but «GAMeover».
