abrdn Smaller Companies Income trust to merge with Shires Income
Shires is also managed by abrdn, led by Iain Pyle and Charles Luke.
The small-cap trust began its review back in February with over a dozen candidates sent proposals to the trust, the board said.
It stated a merger with another investment trust was the most popular suggestion, and an outcome «the board expected to consider as part of the strategic review», it said.
The trust is now set to combine with Shires Income trust, which is run by abrdn managers Iain Pyle and Charles Luke.
Future of abrdn Smaller Companies Income trust to be decided in 'strategic review'
The merger is subject to shareholder approval, who will have the choice to receive either new ordinary shares of 50p each in the capital of Shires, or an unlimited cash exit of 98.5% of the value of assets upon the windup of the current portfolio.
Further documentation will be provided to shareholders in September, with the goal of hosting a convening general meetings in either October or November in order to complete the transaction by that time.
If passed, around 40% of ASCI's portfolio will be transferred to Shires, as it is expected UK small-cap exposure will represent up to 20% of the portfolio on an ongoing basis.
Shires will continue to be managed «on the same basis as it is currently», the board said.
The board said the proposed cash option from Shires had improved «substantially» since the initial offer made in February, prior to the beginning of the strategic review.
The strategic review was triggered by the trust's 18.9% discount, with the board commenting at the time its small-cap focus created «challenges in generating improved liquidity in the company's shares».
Over the twelve months to 24 July 2023, Shires' shares traded at an average 1.5%
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