Abrdn plans to merge its Smaller Companies Income trust with Shires Income following a strategic review.
The trust’s board received proposals from more than a dozen candidates as part of the process. Most of these envisaged a combination with another investment trust, which was the outcome expected.
“After detailed negotiations the board is pleased to announce that it has agreed terms with the board of Shires for a combination of the assets of ASCI and Shires,” the firm said in a statement.
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Both investment trusts are managed by Abrdn Fund Managers and have UK equity income as a key part of their investment objectives, including exposure to UK smaller companies.
ASCI will be liquated and the assets transferred to Shires. Subject to the approval of shareholders of both trusts, the merger scheme will give ASCI’s shareholders the choice between receiving new ordinary shares of 50p each in Shire or a cash option.
The newly enlarged Shires will continue to be managed by Abrdn’s Iain Pyle and Charles Luke in accordance with its existing investment objectives of providing a high level of income together with the potential for growth of both income and capital from a diversified portfolio.
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It will largely target UK equities, but also invest in preference shares, convertibles and other fixed income securities.
Shires shareholders are expected to benefit from an increase in scale, an increase in the dividend of 44.7% per annum and a 31.9% reduction in ongoing costs.
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