Henderson and Fidelity to merge European investment trusts

(Sharecast News) - Henderson European Trust has announced plans to merge with Fidelity European Trust following the shock departure of the former's co-portfolio managers earlier this year, saying that a combination of the two companies is the "best outcome for shareholders". The proposed merger will create a combined entity with net assets in excess of £2.1bn.

February's "sudden" exit of Tom O'Hara and Jamie Ross from Janus Henderson Investors, HET's investment manager, prompted its board to undertake a comprehensive review, explained chair Vicky Hastings in a statement on Thursday.

"The process was well informed by shareholder feedback, which made it clear that, given the material turn of events, all viable options should be considered," Hasting said.

HET said it received a "number of interesting proposals", from Janus Henderson, existing investment firms looking to consolidate and other investment firms proposing to manage the company.

"The board was particularly impressed by the number and calibre of proposals received, including from the incumbent manager, Janus Henderson. However, following a full and thorough process, the board concluded that a combination with FEV represents the best outcome for our shareholders," Hastings said.

HET said that a merger would give both groups enhanced profile and marketability in Europe, experienced portfolio managers with a strong long-term investment performance, as well as "tangible economic upside" for shareholders.

HET and FEV have entered into heads of terms for a combination, which will see part of HET's cash, assets and undertaking roll into FEV in exchange for the issue of new ordinary shares in FEV.

HET shareholders will have the option to elect for a cash exit, priced at a 1.75% discount to the residual formula asset value per share, limited to 33.3% of the issued share capital of HET.