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Alliance Trust confirms merger approach

Alliance Trust confirms merger approach

Alliance Trust has confirmed it has been approached by RIT Capital, owned largely by Jacob Rothschild, to takeover its £2.7bn of assets.

In a statement released on 31 May, the Scottish investment firm confirmed it had an “informal proposal” made recently to merge the two companies.

However, the statement added: “No detailed terms have been provided.”

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RIT now has 28 days to either make a formal offer or announce it has no intention to bid.

The takeover of Alliance Trust, which has been through a long-running battle with activist investors, could put an end to speculation over its future.

Activists were concerned about Alliance Trust’s underperformance against its benchmark, and called for a restructure of the management board.

Alliance Trust finally buckled under pressure in October last year and changed its board members, causing chief executive Katherine Garrett-Cox to leave the firm.

The merger could take the company’s total assets to £5bn.

The board recently appointed specialist investment firm Canaccord Genuity to conduct a strategic review, which will include potential courses of action for the group.

A statement from Alliance Trust said: “The company wishes to thoroughly explore all options available to it for the long-term future benefit of shareholders, and therefore expects that the strategic review outcome may not be determined for some months.”

Adviser View

Mark Dampier, head of investment research at Hargreaves Lansdown, said the merger would create the largest investment trust in the UK and increase liquidity of both trusts dramatically.

“However, both trusts are widely different in their objectives and philosophy. The politics of Alliance Trust’s Scottish base, savings scheme and platform will make this a potentially complex merger,” he added.

katherine.denham@ft.com