A London-based investment house has walked away from a proposed £5 billion mega-merger with Alliance Trust.
RIT Capital, which is headed by veteran British financier Lord Jacob Rothschild, announced to the market that it had “no intention” to make an offer for the Dundee-headquartered Trust.
The move comes just a week after Alliance Trust confirmed it had entered into a formal offer period following an unsolicited approach from RIT.
The combination of the two companies would have made for one of the UK’s largest investment trusts with a market value in excess of £5 billion.
It had also led to speculation over the long-term future of Alliance Trust in its home city, where it employs around 300 staff.
In a statement to the London Stock Exchange, RIT confirmed it had now abandoned its proposer merger with the Trust.
“Following careful analysis and constructive discussions with representatives of Alliance Trust, RIT has concluded that it would not be in the best interests of its shareholders to make an offer for Alliance Trust and accordingly announces that it does not intend to make an offer to acquire Alliance Trust,” RIT said in a statement released to the London Stock Exchange.
“The Board of RIT respects the process which Alliance Trust are going through and wishes them well with their strategic review.”
Alliance Trust shares dipped more than 1% in the minutes after RIT’s announcement.
Alliance had said it would consider RIT Capital’s proposal as part of wider strategic review of its operations.
In response to RIT Capital’s announcement, Alliance Trust confirmed it was no longer in an offer period.
“The board of Alliance Trust is implementing a series of changes to enhance shareholder value,” the company said.
“This process is well under way and has already started to make good progress, lowering costs, narrowing the discount and allowing for the creation of a fully independent board of directors.
“Notwithstanding the achievements to date, this process of development continues and includes a strategic review of the group, encompassing a broad range of potential courses of action.
“In light of this, the board will continue to suspend share buybacks until it has concluded on its strategic review.”
Alliance Trust’s restructuring has accelerated under new chairman Lord Smith of Kelvin. It has undergone an extensive re-shaping in the past year after losing a battle with major shareholder Elliott Advisers, which had complained about underperformance and issues relating to corporate governance.