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Witan and Alliance Trust in Landmark £5bn Merger – Both Shares Gain On News

Analyst Team trader
Updated 26 Jun 2024

In a historic move for the UK investment sector, the Witan Investment Trust (LON: WTAN) has announced a merger with the Alliance Trust (LON: ATST), with aspirations to reach FTSE 100 status.

The union will pool their resources to helm a combined £5 billion portfolio, marking a milestone for both venerable investment institutions. This merger is set to usher in a unified entity known as Alliance Witan investment trust, with Witan's assets being incorporated into Alliance in exchange for freshly issued ordinary shares.

The merger has significant implications for the shareholders of both trusts. In particular, they stand to gain from a new and more advantageous management fee structure alongside the expectation of a reduction in the ongoing charges ratio. The anticipated consequence is a win-win for current investors: an expected rise in Witan shareholders' market value with minimal, if any, dilution in net asset value for Alliance Trust investors.

Following the news, share prices saw a notable uptick. Alliance Trust shares rose by 0.7% to 1,208p.

While Witan's shares leaped by 4.4% to 272.5p, reflecting market optimism about the merger's prospects.

This significant corporate shift was sparked by the stepping down of Witan's CEO, Andrew Bell, which spurred a strategic evaluation that culminated in the merger. Embracing the multi-manager approach that both trusts have implemented, the move aims to capitalise on economies of scale to deliver the same investment strategy at lower fees and within a more liquid vehicle.

It's noteworthy that both Witan and Alliance have built reputations on steadily rewarding their shareholders, each showcasing commendable dividend growth rates over the years. To ease the transition, Willis Towers Watson, presently handling Alliance's portfolio management, has agreed to bear £7.4 million of the costs associated with the merger.


YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.


The emergent Alliance Witan will stay true to both companies' legacies, targeting a more streamlined ongoing charges basis points ratio. The fusion of these entities combines a legacy of active management with a congruent ethos of responsible investment.

Market analysts have lauded the merger, citing the diversified pool of active managers and a shared commitment to responsible investing as positive indicators of the potential for the new investment trust. With such a merger, the landscape of the investment trust industry could witness significant shifts, particularly as Alliance Witan aims to assert itself as a formidable player in the marketplace.

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YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY

The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.