The £782m Edinburgh Worldwide Trust has revealed its shareholder exit plan, launching a 100% tender offer.
This closes the curtain on the trust’s battle with US activist investor Saba Capital, which has made three separate attempts to oust the board.
See also: ‘There isn’t any logic’: Experts react to Saba’s battle with Edinburgh Worldwide
James Carthew, head of investment companies at QuotedData, said: “Edinburgh Worldwide is pressing the self-destruct button and the countdown has begun.” He added: “I understand why, but deeply regret that it has come to this.”
Under the terms of the offer, shareholders who tender their shares will receive approximately 85% cash near net asset value (currently 218.93). Approximately 15% deferred cash will be based on the realised value of SpaceX, which represents 16.6% of the firm’s total assets.
The board argued this offer is better than Saba’s earlier proposal, because it will allow investors to continue to benefit from SpaceX’s future value, while not being “trapped in a Saba-controlled vehicle”.
See also: Saba Capital proposes 100% cash exit for EWI shareholders
The trust’s share price has risen this morning following the news, up more than 3% at the time of writing.
Jonathan Simpson-Dent, chair of Edinburgh Worldwide, said: “We have reached the end of the road with Saba’s obsession to break the status quo and its continuing disregard for the expressed wishes of other shareholders.”
He criticised Saba’s repeated campaigns against the board, which have only distracted from a process that is delivering value.
Edinburgh Worldwide Trust has delivered a 36.1% return over the past three years, the best result in the IT UK Smaller Companies sector. However, over the past five years, it has underperformed, sliding 33.1%.
Simpson-Dent also expressed his frustration with the current regulation, which allows a minority shareholder to continue to oppose the desires of other shareholders.
“While we have galvanised the FCA into action, addressing this systemic problem will take longer than Saba’s repeat smash and grab cycle. Regrettably, we believe it is only a matter of time before Saba succeeds.”
Richard Stone, chief executive of the Association of Investment Companies, has issued fresh calls for the FCA to change listing rules to address this.
Stone argued the current rules are “not fit for purpose” if they allow a minority shareholder to make repeated attempts against one investment trust.
“Unless the FCA steps up, this could happen again and again, and we could see more UK-listed companies disappear,” Stone said.
Investment companies are one of the only ways for investors to get exposure to hard-to-reach private markets, and Saba’s repeated attack could result in the disappearance of a “much valued investment trust,” he concluded.
See also: Edinburgh Worldwide IT shareholders reject Saba proposals
