The Courier & Advertiser (Angus and Dundee)
RIT Capital walks away from £5 billion Alliance Trust merger
Proposed investment trust deal dead in seven days
A London-based investment house has walked away from a proposed £5 billion mega-merger with Alliance Trust.
RIT Capital, which is headed by veteran British financier Lord Jacob Rothschild, declared yesterday it had “no intention” to make an offer for the Dundee-headquartered trust.
The move comes just a week after Alliance Trust confirmed it had entered into a formal offer period following an unsolicited approach from RIT.
The combination of the two companies would have made for one of the UK’s largest investment trusts, with a market value in excess of £5 billion.
It had also led to speculation over the long-term future of Alliance Trust in its home city, where it employs around 300 staff.
In a statement to the London Stock Exchange, RIT confirmed it had now abandoned its proposed merger with the trust.
“Following careful analysis and constructive discussions with representatives of Alliance Trust, RIT has concluded that it would not be in the best interests of its shareholders to make an offer for Alliance Trust and accordingly announces that it does not intend to make an offer to acquire Alliance Trust,” RIT Capital said.
“The board of RIT respects the process which Alliance Trust are going through and wishes them well with their strategic review.”
Alliance Trust shares dipped by more than 1% after RIT’s announcement.
Alliance had said it would consider RIT Capital’s proposal as part of wider strategic review of its operations.
It has undergone extensive restructuring in the past year after losing a battle with major shareholder Elliott Advisers over the underperformance of the portfolio and the trust’s corporate governance.
Lord Robert Smith of Kelvin was appointed chairman in January and the changes have accelerated under his tenure. In response to RIT Capital’s declaration, Alliance Trust confirmed it was no longer in an offer period.
“The board of Alliance Trust is implementing a series of changes to enhance shareholder value,” the company said.
“This process is well under way and has already started to make good progress, lowering costs, narrowing the discount and allowing for the creation of a fully independent board of directors.
“Notwithstanding the achievements to date, this process of development continues and includes a strategic review of the group, encompassing a broad range of potential courses of action. In light of this, the board will continue to suspend share buybacks until it has concluded on its strategic review.”
Alliance Trust shares closed down 3.20 at 513.30 following the stock trading session yesterday.