Henderson provides an update to its proposed European trust merger

The board of Henderson European Focus Trust (HEFT) has provided an update on its merger with Henderson Eurotrust (HNE). The merger was initially announced on 14 March, with the intended new trust being named Henderson European Trust. The boards of HNE and HEFT have now agreed on revised terms to the merger, with the updated proposal now including:

• Increased cash option: Under the updated proposals, the limits on the cash exit for HNE and the HEFT tender offer have been increased from 5% to 15% of each company’s issued share capital.
• Enhanced contribution from Janus Henderson to the costs of the proposals: Janus Henderson had committed to make a contribution to the costs of the merger, with a view to ensuring it is cost-neutral for continuing shareholders in the combined trust. Under the updated proposal, Janus Henderson will make a contribution of £1.55m to the costs which will ensure that, net of the application of the 2% discount to the HNE cash exit and the HEFT tender offer, the updated proposals are cost-neutral, with any surplus being available for the benefit of ongoing shareholders in the newt rust.
• Reduced management fees for the combined trust: under the updated terms the new trust will benefit from a further improvement in management fee terms, with an additional reduction on the second management fee tier from 50 bps p.a. to 47.5 bps p.a. The management fees will be charged on the following basis:

  60 bps p.a. on net assets up, but excluding, to £500m;

  47.5 bps p.a. on net assets equal to and in excess of £500m and up to £1bn;

  45 bps p.a. on net assets equal to and in excess of £1bn.

• Additional discount control mechanism: in addition to the previous commitment of a 5-yearly performance-related tender offer under the proposals, the board of the new trust will consider, at its discretion, subject to normal market conditions and no earlier than after an initial three year period, whether it would be in the long term interests of shareholders as a whole to be offered additional opportunities to realise some of their investment in the new trust. The board’s consideration will, alongside other factors, recognise the importance to shareholders that the trust’s shares should not persistently trade at a significant discount to NAV in absolute terms or relative to the peer group.

In connection with the updated proposals, documentation is still expected to be sent to each company’s shareholders by the end of May 2024 with a view to convening general meetings in June and July 2024. The updated proposals are anticipated to conclude in early July 2024.

[QD comment: The amended terms followed an unsolicited proposal from a third-party that suggested that it combine with Henderson EuroTrust instead. That highlights the degree to which M&A actvity in the sector has picked up over the past year or so, and it feels like a healthy development to us.]

HEFT / HNE : Henderson provides an update to its proposed European trust merger