Alliance Trust PLC and Witan Investment Trust plc have officially announced their intention to merge, forming a new entity named Alliance Witan PLC. This strategic move follows a detailed review by Witan of its investment management arrangements and aims to create a powerhouse in the global equity investment market.

Merger Highlights:

– Combined Strengths: The newly formed Alliance Witan PLC will capitalize on Alliance Trust’s successful multi-manager investment model, managed by Willis Towers Watson (WTW), to foster an actively managed global equity portfolio. This strategy will now benefit from enhanced liquidity, visibility, and cost efficiency, making it a prime candidate for inclusion in the FTSE 100 Index.

– Financial Scale: With combined net assets approaching £5 billion, Alliance Witan is poised to achieve significant economies of scale, leading to lower management fees and ongoing charges for its shareholders.

– Dividend Policy: The merger will see an increase in interim dividends for the financial year ending December 2024, aligning with Witan’s dividend payments to ensure continuity and growth in shareholder returns. This approach will extend Alliance Trust’s remarkable record of consecutive dividend increases to 57 years.

Strategic Benefits:

– Enhanced Investment Management: By merging, the entities combine their expertise in multi-manager strategies, providing access to top-tier global managers and reducing investment volatility.

– Improved Cost Efficiency: The merger is structured to lower overall costs through a revised fee structure with WTW and reduced ongoing charges, leveraging the scale of the combined entity.

– FTSE 100 Eligibility: The substantial increase in net assets and profile raises the likelihood of Alliance Witan’s inclusion in the FTSE 100, enhancing secondary market liquidity.

Transaction Details:

– Scheme of Reconstruction: The merger will be executed through a scheme of reconstruction under section 110 of the Insolvency Act 1986, with Witan’s assets merging into Alliance Trust in exchange for newly issued Alliance Witan shares.

– Management and Fees: WTW will continue to manage the combined assets under a new, more competitive fee structure, ensuring continuity and efficiency in investment management.

Dean Buckley, Chair of Alliance Trust, emphasized the significance of this merger in the UK investment market, highlighting the enhanced scale and efficiency that Alliance Witan will bring. Andrew Ross, Chairman of Witan, noted the seamless integration of multi-manager strategies and the shared commitment to providing a comprehensive investment solution for retail investors.

The merger is set to complete by late September to early October 2024, pending shareholder and regulatory approvals. This historic combination marks a significant milestone in the investment trust industry, promising robust growth and superior service to shareholders through a streamlined, effective investment platform.

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