(Alliance News) - Witan Investment Trust PLC and Alliance Trust PLC on Wednesday announced plans to combine creating a firm with assets under management of more than GBP5 billion.
The deal follows a comprehensive strategic review by the board of Witan of its investment management arrangements.
Witan Chair Andrew Ross said the board assessed a number of very strong proposals but was unanimous in recommending the combination with Alliance Trust.
"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," Ross remarked.
Shares in Witan IT rose 4.3% to 272.13 pence in London on Wednesday, giving it a market value of GBP1.64 billion. Alliance Trust rose 0.5% to 1,210.48p giving it a market value of GBP3.42 billion.
Witan's assets will be rolled into Alliance Trust in exchange for the issue of new ordinary shares in the newly-named Alliance Witan PLC, the companies said.
The merger will be implemented through a scheme of reconstruction.
Witan shareholders are 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.
"With net assets of around GBP5 billion, significant economies of scale, eligibility for FTSE 100 inclusion, powerful and well-established brand recognition on both sides, and proven marketing expertise backed by dedicated resources and budget, Alliance Witan will aim to be the UK's leading global equity investment proposition, at the core of retail investors' portfolios," the firms said in a statement.
On completion, Alliance Witan will increase its third and fourth interim dividends for the financial year December 31 so that they are commensurate with the first interim dividend of 1.51p per share paid to Witan shareholders earlier this month.
The new company will introduce a new, "more competitive" management fee structure, which coupled with the greater economies of scale on an enlarged portfolio is expected to result in a lower ongoing charges ratio, particularly for Witan shareholders.
The combined vehicle will offer improved secondary market liquidity, with expected eligibility for promotion to FTSE 100 Index in due course.
The deal is expected to be completed in the third or fourth quarter of 2024.
Alliance Trust Chair Dean Buckley said: "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."
The combination of Witan and Alliance follows a trend which has seen a wealth of mergers in 2024. In May, Tritax Big Box REIT and UK Commercial Property REIT completed a deal, creating a GBP5 billion firm.
Other mergers this year include Henderson High Income Trust PLC and Henderson Diversified Income Trust PLC, JPMorgan UK Smaller Companies and JPMorgan Mid Cap, Fidelity China Special Situations and abrdn China, JPMorgan Global Growth & Income and JPMorgan Multi-Asset Growth & Income, and STS Global Income & Growth and Troy Income & Growth.
By Jeremy Cutler, Alliance News reporter
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