GAM opposes takeover of Honda subsidiary by Samvardhana Motherson

On December 22, the portfolio managers of the GAM Japan Special Situations Fund, the GAM Special Situations Fund and the GAM Global Opportunities Fund published an open letter to the Chairman of Yutaka Giken, regarding the proposed tender offer by Samvardhana Motherson. In the open letter, the portfolio managers call for full transparency on the fairness analysis supporting the proposed transaction and urge Yutaka Giken to either abandon the transaction or seek a materially higher price, in order to protect minority shareholders. The letter highlights that the tender offer premium to Yutaka Giken’s undisturbed share price is 6.4%, compared with an average premium of 28.7% across comparable transactions referenced by Yutaka Giken’s independent valuation adviser. Based on the information disclosed to date, the portfolio managers also state that the implied valuation appears to be below the company’s net cash. In the letter, the portfolio managers urge Yutaka Giken to: Publish in full the fairness opinion and the supporting valuation work underpinning the proposed terms, including key discounted cash flow assumptions. Reassess the transaction and either withdraw it or secure a significantly higher price, noting their view that simple takeover metrics imply a value at least 50-70% higher than the current offer price of Y3,024 per share. Provide greater clarity on the transaction process, including any ancillary arrangements referenced in the tender documentation, and how minority shareholder interests are being safeguarded. Albert Saporta and Randel Freeman, Co-Heads of GAM Alternatives, said: “Based on the information currently available, we believe the proposed transaction does not reflect fair value and raises serious concerns regarding transparency and the protection of minority shareholders. We are calling for full disclosure of the fairness analysis and an outcome that appropriately reflects Yutaka Giken’s intrinsic value.”