In a class-action suit filed in the US state of Delaware this week, Ron Duva alleged that the hedge fund company’s management had agreed to a merger that was designed to benefit them to the detriment of ordinary shareholders.
The US law group Bull & Lifshitz called for other GLG shareholders to come forward on Tuesday with an eye to joining the suit.
Man Group announced a bid for GLG on Monday last week, offering ordinary shareholders $4.50 a share, a 55 per cent premium to the market price, in a deal that valued the company at $1.6bn.
Mr Duva alleges that the management of GLG – particularly the group’s three leading principals, Emmanuel Roman, Pierre Lagrange and Noam Gottesman – stand to gain more than ordinary shareholders from the transaction. GLG’s principals control approximately 40 per cent of the company’s existing stock, which Man Group has offered to convert into Man shares.
Based on market prices at the time of the offer, the deal values the principals’ shares at $3.50 each.
However, under the terms of the merger, GLG’s principals are guaranteed employment – and consummate benefits – at the merged group.
“The proposed transaction therefore has been structured to permit GLG principals to participate in the benefits of the combined Man Group/GLG post-transaction entity while GLG’s public shareholders are cashed out at just $4.50 per share,” Mr Duva’s complaint said.
GLG said: “We are confident that these types of claims will have no impact on GLG’s transaction with Man Group.”