Alliance Trust (ATST) and Witan Investment Trust (WTAN) have announced that the two companies will combine to form Alliance Witan. Under the new deal, Witan’s assets will be rolled into Alliance Trust in exchange for the issue of new ordinary shares in the newly-named Alliance Witan.
Specifics of the deal include:
- Alliance Trust’s investment strategy, providing exclusive access to the best ideas of leading active managers globally, remains unchanged.
- Introduction of a new, more competitive management fee structure, coupled with the greater economies of scale on an enlarged portfolio of approximately £5bn, is expected to result in a lower ongoing charges ratio, particularly for Witan shareholders.
- Enhanced third and fourth interim dividend payments for shareholders in the enlarged Alliance Witan will extend the dividend hero status of both companies.
- Witan shareholders expected to benefit from an immediate uplift in market value on completion of the transaction, and will have the option of a partial cash exit.
- Combined vehicle to offer improved secondary market liquidity, expected eligibility for promotion to FTSE 100 Index in due course.
- Assets to be rolled over to Alliance Trust to include Witan’s listed investment company holdings and Witan’s secured loan notes will be novated to Alliance Trust.
- Alliance Trust’s investment manager, Willis Towers Watson, to make a significant contribution to help absorb transaction costs. Alliance Trust shareholders are not expected to suffer any net asset value dilution from the direct costs of the transaction; Witan shareholders expected to suffer no or minimal net asset value dilution, depending upon the level of take-up of the cash exit option.
- Deal, expected to be completed in late Q3/early Q4 2024, preserves distinguished heritages of both companies and represents the largest ever conventional equity investment trust combination.
QD comment: [While not an unexpected move following the retirement of Witan CEO Andrew Bell, this announcement remains a significant one given it involves two of the sector’s larger and most established companies. The decision is also likely in response to Witan’s ongoing poor performance with the trust one of the sector’s worst performers over the past 10 years. The deal with Alliance appears to be a good fit on first blush, given the similarities of the two funds – both are large global funds with multi-manager approaches – and is certainly a positive for both in our view given the benefits of increased efficiency that the combination will bring. Witan shareholders will also benefit from Willis Towers Watson’s approach that has driven ATST superior performance as well as the 5% discount level that ATST defends.]
Dean Buckley, chair of Alliance Trust, commented:
“The formation of Alliance Witan brings together the two leading open-architecture multi-manager investment company propositions in the UK to form a FTSE 100 equity investment vehicle with the quality, cost efficiency, and profile to play a leading role in the UK investment market. Shareholders will benefit from access to the proven investment process implemented by our investment manager, Willis Towers Watson, and access to the world’s leading stock pickers. This is also a significant moment for our industry in broader terms – Alliance Witan represents a key milestone in the history of the investment trust structure, which has demonstrated its capabilities very effectively over many decades.
“Witan was an early adopter of the multi-manager solution and, on behalf of my board, we congratulate Andrew Bell and his team on all that they have achieved during their tenures. Combining our two historic companies, established in 1888 and 1909 respectively, recognizes the attractive opportunity to deploy the investment strategy, which has proved to be robust through the investment cycle, at significantly greater scale.”
Andrew Ross, chairman of Witan, commented:
“Since Andrew Bell announced his intention to retire, we have been through an extensive process to identify the best candidate to take on the management of our shareholders’ assets. The board assessed a number of very strong proposals, including single-manager candidates with impressive track records. However, the board was unanimous in recommending the combination with Alliance Trust, which allows the continuation of our multi-manager approach at lower fees and in a larger, more liquid vehicle. The companies share similar cultures and a mutual desire to provide a “one-stop shop” for retail investors in global equities. I am delighted to announce this transaction, the largest ever investment trust combination, in Witan’s 100th year as a quoted company on the London Stock Exchange. The deal will result in one of the leading investment companies listed in London and will stand our shareholders in good stead for many years to come.”
ATST: Alliance and Witan to combine