The board of the Monks Investment Trust PLC (LSE:MNKS) has agreed to merge with the assets of The Independent Investment Trust PLC.
Shareholders in IIT will be able to receive ordinary shares in Monks and/or realise a proportion or all of their holding for cash, with the latter at a 2% discount based on a “formula asset value” or FAV.
After Max Ward, IIT's managing director and full-time portfolio manager, recently revealed that he wished to retire, the board of the trust said it “carefully considered the various options available and decided that a combination with Monks offered the greatest benefit to IIT shareholders" given the impact that the retirement would have on the company.
The directors of IIT, who own circa 24.3% of its issued share capital, said they intend to recommend the deal to shareholders and to elect to receive shares in Monks for the full extent of their holdings.
Monks, which would continue to be managed by Baillie Gifford, would benefit from economies of scale and an inflow of cash that could be redeployed “at a potentially advantageous stage of the performance, discount and market cycles”, the Monks board said in a statement.
The Monks managers have assessed IIT’s portfolio of a collection of UK growth stocks for “potential upside and portfolio fit”.
IIT's board noted that Ballie Gifford's Global Alpha team, which took over the management of Monks in 2015, has a “strong long term record, and the wide diversification of the portfolio, beyond the resources of IIT”, with the trust possessing assets of £2.5bn at the end of June.