The Rothschild‑linked company that last week revealed an informal takeover approach to Dundee-based Alliance Trust has walked away from the talks.
RIT Capital Partners said that, “following careful analysis and constructive discussions” with representatives of the wealth manager, it 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”.
A tie-up between the two would have created an investment business worth more than £5 billion.
The firm, chaired by Jacob Rothschild of the eponymous financial dynasty, added: “The board of RIT respects the process which Alliance Trust are going through and wishes them well with their strategic review.”
Alliance Trust, rocked by investor activism and boardroom upheaval over the past 18 months that has seen the ousting of chief executive Katherine Garrett-Cox and chair Karin Forseke, had said that its ongoing strategic review may take “some months”.
In response to RIT’s decision, the group said its board, led by chairman Lord Smith of Kelvin, is implementing “a series of changes to enhance shareholder value”.
It added: “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.”
The group’s Alliance Trust Savings (ATS) arm last week named Tim Tookey, the former Lloyds Banking Group finance director, as its chairman. His appointment comes after last year’s decision by ATS’s parent to create a separate board for the division, which looks after £11.5bn of assets.
Some analysts and senior financial figures in Scotland had expressed reservations about whether a deal would crystallise, saying the investment strategies of Alliance Trust and its would-be suitor were very different.
In addition, there were suggestions that, as the Dundee trust had already achieved much of its reorganisation after investor pressure, mainly from American hedge fund Elliott Advisors, it might want to lead an independent path for the foreseeable future.