PA ANALYSIS: A lot at stake in ‘unsurprising’ RIT/Alliance bid

Added 31st May 2016

That there was a bid for Alliance Trust announced on Tuesday was a lot less surprising for many commentators than that it was the Rothschild Investment Trust contemplating the offer.

PA ANALYSIS: A lot at stake in ‘unsurprising’ RIT/Alliance bid

The recent travails at Alliance Trust have been well reported, as has the growing prominence of Elliot Advisors within the trust, following its moves to secure board changes over the past 12 months or so.

As Numis Securities pointed out, in a note out on Tuesday following the confirmation by both boards that talks were ongoing: “Elliott Advisor’s commitment to a 12 month cease fire came to an end following Alliance Trust’s AGM on 6 May, paving the way for renewed corporate action”.

It was, however, surprised that RIT was the first group to make a move. This is because, it explained, takeovers are often difficult to achieve as “merger proposals are often met by a hostile defence from the incumbent Board which seeks to find a white knight alternative”.

But, as it points out, because of the recent board changes at Alliance Trust, including the departure of Chairman Karin Forseke and CEO, Katherine Garrett-Cox, there is likely to be less resistance than there might have been. “Nevertheless,” it added, “a merger between the two funds would require a significant number of existing direct directors to stand down: Alliance Trust has six directors and RIT Capital nine, including three non-independent directors.”

Charles Stanley investment analyst Stephen Peters agreed that such an announcement wasn’t too surprising as, while it has a 16% stake in the trust, Elliot is not a natural long-term shareholder, “At some point it will want its money back to invest elsewhere – the group is happy to admit that their interest in Alliance Trust came about because it could not, post financial crisis, find more interesting opportunities elsewhere.”

He said a merger with a vehicle that is already at critical mass and that is well-known and well respected would allow Elliott and other shareholders to leave if they wished, but that others could remain invested in a well-managed fund. But, there are other issues to consider.


Overseas earners will be key amidst 2017 inflation

Sponsored by Neptune

Overseas earners will be key amidst 2017 inflation...

A by-product of sterling weakness is inflation, and we expect this to continue to gather steam over the coming months, with energy and food prices the hardest hit....

Kames Income Hub


Vincent McEntegart, manager of the Kames Diversified Monthly Income Fund, explains how he aims to deliver a stable and sustainable income of 5% p.a.*, paid monthly, by investing in a range of asset classes

Square Mile Research

AXA Distribution Fund
AXA Distribution Fund

Talking Factsheets is a video service for users...

Visitor's Comments Add your comment

Add Your Comment

We won't publish your address

About Author

Geoff Candy

Group digital editor

Geoff Candy joined Portfolio Adviser as News Editor in May 2014. He has been a financial journalist and broadcaster since 2005 and, in that time has worked in both South Africa and the Netherlands, covering everything from high street retailers and construction companies to mining and insurance.



Investment Strategy




PA Alternative Ucits 2017 Congress
PA Alternative Ucits 2017 Congress

Tuesday 25 April
The Langham, London

PA Europe 2017
PA Europe 2017

Thursday 11 May
Furniture Makers' Hall

PA Channel Islands 2017
PA Channel Islands 2017

Wednesday 24 May
Royal Yacht Hotel, Jersey

PA UK Equity 2017
PA UK Equity 2017

Thursday 15 June
Radisson Blu Edwardian Bloomsbury Street Hotel

Sponsored Content

Investment Strategy