Growing Shareholder Opposition to Daniel Loebs Third Point Reinsurance Merger

A mounting rebellion against billionaire hedge fund manager Daniel Loeb’s latest deal is gaining momentum as a fifth major shareholder voices stern opposition to the proposed merger. Evelyn Partners, holding a 3% stake in Third Point Investors, has joined the chorus of dissent regarding the £68 million acquisition of Malibu Life Reinsurance.

The controversial reverse takeover would transform Third Point from an investment group into a reinsurance company, a move that has sparked significant concern among shareholders. Augustus Edwards of Evelyn Partners delivered a scathing assessment, stating the board of directors had failed to protect minority shareholders’ interests.

The opposition now includes Asset Value Investors with 7.1%, Staude Capital approaching 2%, and both Hawksmoor Investment Management and Metage Capital each controlling approximately 1%. Sources indicate numerous undeclared investors are preparing to vote against the transaction, setting the stage for a crucial test of the Financial Conduct Authority’s revised rules on related-party dealings.

Under current regulations, Loeb, who manages the trust and holds a 25% stake, can now vote on acquiring a business he owns – a practice previously prohibited. The deal requires only a simple majority shareholder approval, but investors are particularly incensed that the board, led by Chairman Rupert Dorey, agreed to this fundamental status change without offering dissenting shareholders an exit option at near net asset value.

The proposed tender offer of £75 million represents less than a quarter of Third Point’s market value and comes with a substantial 12.5% discount to NAV. The trust, launched in 2007 as a feeder into Loeb’s hedge fund, has consistently traded at a significant discount, averaging 21.5% below NAV over the past year.

The board’s spokesman defended the decision, describing it as an “innovative solution” to persistent issues within the investment trust sector. However, with mounting opposition and governance concerns, the fate of this controversial merger hangs precariously in the balance.