Lauren Hardy, Portfolio Adviser, 26 JUNE 2024:
The proposed merger between Witan investment trust (WTAN) and Alliance Trust ATST) is “not unexpected” and “makes sense” amid myriad headwinds for the investment company sector, according to analysts. But while benefits including lower costs, greater liquidity and “increased efficiencies” are welcome, question marks remain as to the 8% of Witan’s portfolio which is invested in other trusts.
This morning (26 June), the boards of both trusts announced that Witan’s assets will be rolled into Alliance Trust, creating a vehicle with net assets of approximately £5bn. This will make the proposed merger the single largest trust merger to have taken place in the UK.
Should the deal get the green light, the merger will complete between September and October this year, when the new shares for Alliance Witan will be issued.
The combination will take place via a scheme of reconstruction by Witan, while WTAN’s shareholders will be able to opt for a cash exit at 97.5% of NAV minus costs – subject to a 17.5% limit on shares held.
The merger will also lead to a lower management fee structure for the trust, as well as an OCF below 60 basis points. Currently, Witan and Alliance Trust’s OCFs stand at 76 and 62 basis points, respectively.
Andrew Courtney, investment analyst at QuotedData, said that while the move is “not unexpected” given the retirement of Witan CEO Andrew Bell, the announcement “remains a significant one”.
“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.”..
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