BlackRock is set to merge two of its investment trusts, Throgmorton Trust and BlackRock Smaller Companies Trust (BRSC), to form a combined £780m entity, after receiving support from activist investor Saba Capital Management.
Saba holds an 18% stake in Throgmorton and 10% in BRSC and has agreed to vote in favour of the merger, taking a cash exit as part of the transaction. Shareholders will be offered a 38% cash exit in Throgmorton Trust and a 28% cash exit in the Smaller Companies Trust.
James Will, chair of BlackRock Throgmorton Trust, said the merged trust would be “uniquely placed to capture the compelling UK smaller companies opportunity, underpinned by BlackRock’s deep investment heritage across many decades and market cycles.”
Two general meetings have been scheduled for shareholders to vote on the merger, with the first set for 26 March at 10am.
In a statement the activist hedge fund said: ““Saba welcomes today’s announcement, which includes several shareholder-friendly initiatives for the combined company such as reduced management fees, lower ongoing charges, an initial cash exit opportunity and a triennial conditional exit opportunity.
“We appreciate the constructive dialogue we’ve had with the Companies’ boards of directors and their advisors and believe the combination proposal is in the best interests of shareholders.”
Earlier this month, Herald Investment Trust cancelled a tender offer after Saba Capital Management voted against it.
Herald’s board said discussions with Saba are ongoing, and a new tender offer allowing shareholders to tender up to 100% of their holdings could be launched if an agreement is reached.
