LONDON, UK: Shires Income PLC (Shires) has announced that it has agreed to merge with Aberdeen Smaller Companies Income Trust PLC (ASCI) in a deal that will create a larger UK equity income investment trust with exposure to UK smaller companies.
The merger will be implemented through a scheme of reconstruction and voluntary winding up of ASCI, which will give ASCI shareholders the option to receive new shares in Shires or cash. ASCI shareholders who do not elect for cash will automatically roll over their holdings into Shires. ASCI expects to pay out most of its accumulated revenue reserves as a pre-liquidation dividend to its shareholders and repay its credit facility before the merger.
Shires, which already owns 29.9 per cent. of ASCI, will transfer its shareholding in ASCI to the enlarged trust without receiving any new shares. The enlarged trust will continue to be managed by abrdn Fund Managers Limited, with the same investment objective and management terms as Shires.
The deal is subject to the approval of shareholders of both companies and is expected to be completed in the fourth quarter of 2023. The boards of both companies believe that the merger will benefit shareholders by creating a larger and more diversified trust with enhanced liquidity and lower costs.
Shires aims to provide a high level of income and capital growth from a portfolio of UK equities and fixed income securities. It has a target dividend of 14.20p per share for the year to 31 March 2023, representing a yield of 6.1 per cent. based on its share price as at 24 July 2023. It has also issued new shares periodically to meet demand and has traded at an average discount to NAV of 1.5 per cent. over the past year.
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