Alliance Trust has revealed it received an “unsolicited” informal takeover approach from Jacob Rothschild’s rival investment trust that could create a business worth more than £5 billion.
The Dundee-based group, riven by investor unrest and management upheaval for the past 18 months or so, yesterday confirmed the speculation surrounding an approach from RIT Capital Partners.
“However, no detailed terms have been provided by RIT with regard to the proposal or in respect of the company’s two principal operating subsidiaries,” the company added.
“The board of Alliance Trust will incorporate any formal merger proposal received from RIT into its strategic review, alongside the other options being considered.”
Alliance Trust said it had recently appointed Canaccord Genuity and other specialist advisers to advise on an ongoing strategic review of the business “encompassing a broad range of potential courses of action”.
It added: “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.”
RIT Capital, which is worth £2.5bn, disclosed a holding of less than 3 per cent in Alliance Trust last year. The Scottish company had a stock market value of £2.6bn at the end of last week.
Alliance Trust warned yesterday that there was “no certainty that any transaction will result from the strategic review”, and that its shareholders were strongly advised to take no action and await the outcome of the review.
The wealth manager shook up its board after a prolonged campaign by Elliott Advisors, the Wall Street hedge fund, about the company’s poor performance and corporate governance.
Elliott, which now holds 16 per cent of the shares, got two of its three nominated independent directors onto the board in the spring of 2015, and since then Alliance Trust’s chief executive Katherine Garrett-Cox and chairman Karin Forseke have been ousted.
Industry veteran Lord Smith of Kelvin joined as the new chairman in February.
Some long-standing industry executives were sceptical yesterday that RIT, 18 per cent owned by Lord Rothschild, could consummate a deal with Alliance.
One Scottish figure with intimate knowledge of the investment trust sector told The Scotsman: “I think it is a long shot, frankly. It is just one of many informal approaches Alliance has had over the past 15 months or so, and the numbers have not added up in paying close to asset value to get a deal. You also have got a new board in there, why would they want to throw in the towel?”