The rumor mill has been busy in recent weeks with developments around troubled Swiss fund manager GAM. Now, a UK asset manager has extended a buyout offer, which GAM accepted.

Swiss fund manager GAM agreed to an offer from Liontrust to exchange 0.0589 of ordinary Liontrust shares for one of its own, according to a media release Thursday. That amounts to 9.4 million Liontrust shares.

«Our choice of a strategic option was informed by the need to address the interests of all our stakeholders,» said GAM chairman David Jacob. The move is supported by nearly 20 percent of its shareholders, and management.

Jacob went on to say Liontrust's offer provided GAM with the best opportunity to «decisively address all of the recent corporate uncertainty» at the firm.

Liontrust intends to rename all GAM funds as soon as possible after the completion of the deal and run the GAM business under the Liontrust brand. Based on the most recent information available, the new entity will have $65.8 billion of assets under management, according to calculations by finews.com. 

GAM shareholders are expected to hold a stake of approximately 12.6 percent in the combined group upon completion of the transaction which is expected in the fourth quarter and subject to the usual regulatory approvals.

French Billionaire

Just last week, an investor group consisting of Geneva-based Newgame and Swiss asset manager Bruellan announced it either holds or has the right to exercise the voting rights of around 12 million GAM shares representing about 7.5 percent of outstanding share capital, according to a statement.

The group is against the sale of GAM and was created with «the sole purpose of coordinating certain decisions about the participants' stake in GAM Holding.» It invested because it sees «an opportunity to restore the company's reputation as a best-in-class asset management firm.»

It is currently unclear what they think of the acquisition by Liontrust.

Swiss Heritage

Liontrust said it remains committed to the international presence GAM has developed and its client relationships which are important to GAM's heritage, particularly in Switzerland. 

Liontrust will provide two loan facilities with up to 17.8 million pounds ($22.3 million) to complete the transaction and ensure a smooth transition.

Declining Revenues and Managed Assets

GAM CEO David Sanderson said, «As a result of the decline in our assets under management and the consequent impact on our revenues and profitability, the Board has decided that the best strategic option is to recommend that we sell our business to Liontrust Asset Management.» 

For 2022, GAM reported a net loss of 290 million Swiss francs, primarily due to brand impairment, and its operating loss ballooned to 42.5 million francs from 9.6 million francs in 2021. Assets under management (AuM) stood at 75.0 billion francs at the end of last year, according to first-quarter results. 

In the first quarter, more outflows hit outflows the Investment Management and Fund Management units. At the end of March, AuM stood at 23.3 billion Swiss francs in Investment Management and 48.4 billion francs in Fund Management Services.

Yesterday's closing price was 0.801 francs. Last week, the GAM share price had already risen noticeably due to the takeover rumors and had at times risen to 0.94 francs. In March, the value had fallen to 0.4845 francs at the low. In trading this morning it is currently az 0636 francs, down about 22 percent. 

An offer prospectus is scheduled to be published on or around June 9, according to a statement from GAM on Thursday.

More to follow