GAM in talks with Niel's NewGAMe after Liontrust offer falters

By Brenna Hughes Neghaiwi and Noele Illien

ZURICH (Reuters) -GAM has entered into discussions with French billionaire Xavier Niel's NewGAMe shareholder group after a takeover offer from Britain's Liontrust failed to gain the required level of support.

British asset manager Liontrust won the backing of just 33.64% of GAM's shareholders, interim results published on Thursday showed, prompting GAM's board to enter into discussions with the shareholder group with whom it has been at odds since May, seeking bridge financing for the troubled asset manager as well as an expected turnover in management.

"The GAM Board acknowledges that the majority of our shareholders have not found the Liontrust Offer compelling. I am pleased that we have entered constructive and productive discussions with NewGAMe and that these discussions continue at speed," Chairman David Jacob said.

GAM shares fell 5.08% shortly after market open, whereas Liontrust recorded a 10.37% gain.

Liontrust had made its offer conditional on winning the backing of two-thirds of GAM's shareholders in a prospectus it published in June.

Liontrust, which has until August 29 to decide whether it will waive the condition and complete the transaction anyway, said it currently expects to declare its offer to takeover GAM unsuccessful on that date.

After a year-long battle against cash outflows, GAM agreed to the takeover in May.

Liontrust offered 107 million Swiss francs ($122 million) in its own shares at the time, a deal now worth considerably less owing to a decline in Liontrust's share price.

The investor group, led by Niel's NewGAMe and asset manager Bruellan, have vehemently opposed the all-share offer, saying in July that it "grossly undervalues GAM".

The opposing shareholder group, which now controls 9.6% of GAM's shares, wants to keep GAM listed, restructure it and focus more on business with super-rich private clients.

Discussions with the group are now focused on providing a bridge loan, GAM said, adding it expected the group to provide proposals for a board shake-up and an extraordinary general meeting.

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 organizing an extraordinary general meeting to renew the board," it said.

($1 = 0.8768 Swiss francs)

(Reporting by Brenna Hughes Neghaiwi and Noele Illien; editing by Friederike Heine, Jason Neely and Christina Fincher)