TIDMMNL TIDMDDIT
Manchester & London Investment Trust PLC
Possible merger with
Stakeholders' Momentum Investment Trust PLC
For immediate release
26 March 2010
The boards of Manchester and London Investment Trust PLC ("MLIT") and
Stakeholders' Momentum Investment Trust PLC ("SMIT") announce that they are
considering proposals which may lead to a merger of MLIT and SMIT to be
effected by way of a possible offer by MLIT for SMIT. Under the terms of the
Offer being discussed accepting SMIT Shareholders would receive new MLIT
Shares, the number of which would be determined by reference to a formula based
on net assets per share. If the Offer is made, there would be a cash
alternative, in order to comply with the Takeover Code, of 217.5 pence per SMIT
Share.
The formula to be used to determine the value of the Offer is summarised in the
appendix to this announcement.
Both MLIT and SMIT are managed by Midas Investment Management Limited ("Midas").
Midas and the Board of MLIT believe the proposed Offer would allow the two
investment companies to increase their respective scale which in turn could
lead to the following benefits:
* A larger net asset base for the merged Group which may provide more
liquidity in the shares of the listed parent company of Group; and
* costs reductions as a proportion of net assets through economies of scale.
Certain major shareholders in SMIT have been approached and have signed letters
indicating that if an Offer, based on the relative formula asset value of MLIT
and SMIT, were to be made, they would accept it in respect of 2,958,042 SMIT
Shares owned by them or under their discretionary management representing
51.64% of SMIT's issued share capital as follows:
Name SMIT Shares %
Manchester & Metropolitan Investment Ltd ("M&M")* 2,619,262 45.73%
Charles Stanley & Co Limited 135,500 2.37%
Smith & Williamson Investment Management Ltd 101,008 1.76%
Rathbone Investment Management Ltd 93,452 1.63%
Brewin Dolphin Ltd 8,820 0.15%
--------- ------
Total 2,958,042 51.64%
========= ======
*Including the 271,730 SMIT Shares owned the BS Sheppard 1991 Settlement which
is deemed to be acting in concert with M&M.
It is emphasised that the letters of intent are not legally binding and that it
is possible that no offer or other proposals will be made to the shareholders
of either MLIT or SMIT. MLIT and SMIT reserve the right to implement the
proposed merger by way of a scheme (instead of by an Offer) and the letters of
intent state the signatories' intention to vote in favour of such a scheme. In
addition to the SMIT Shares held in funds under discretionary management shown
above, advisory clients of Charles Stanley & Co. Limited, Rathbone Investment
Management Ltd and Brewin Dolphin Ltd hold 1,000, 2,750 and 21,697 SMIT Shares
respectively. Charles Stanley & Co. Limited, Rathbone Investment Management Ltd
and Brewin Dolphin Ltd have stated their intention to advise such clients to
accept the Offer in respect of such 25,447 SMIT Shares representing 0.44% of
SMIT's issued share capital.
The Board of SMIT has appointed Libertas Capital Corporate Finance Limited as
its independent financial adviser in accordance with Rule 3 of the Takeover
Code.
A further announcement will be made in due course.
Rule 2.10 of the City Code on Takeovers and Mergers requires the announcement
of the number of shares (outside treasury) in issue of MLIT and SMIT. MLIT has
17,504,955 Ordinary Shares of 25p each in issue and admitted to trading on the
London Stock Exchange under ISIN code GB0002258472 and SMIT has 5,727,694
Ordinary Shares of 25p each in issue and admitted to trading on the London Stock
Exchange under ISIN code GB0002974375.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Takeover Code (the "Code"), if any
person is, or becomes, "interested" (directly or indirectly) in 1% or more of
any class of "relevant securities" of MLIT or of SMIT, all "dealings" in any
"relevant securities" of that company (including by means of an option in
respect of, or a derivative referenced to, any such "relevant securities") must
be publicly disclosed by no later than 3.30 pm (London time) on the London
business day following the date of the relevant transaction. This requirement
will continue until the date on which the offer becomes, or is declared,
unconditional as to acceptances, lapses or is otherwise withdrawn or on which
the "offer period" otherwise ends. If two or more persons act together pursuant
to an agreement or understanding, whether formal or informal, to acquire an
"interest" in "relevant securities" of MLIT or SMIT, they will be deemed to be a
single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant
securities" of MLIT or of SMIT by MLIT or SMIT, or by any of their respective
"associates", must be disclosed by no later than 12.00 noon (London time) on the
London business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose "relevant
securities" "dealings" should be disclosed, and the number of such securities
in issue, can be found on the Takeover Panel's website at
www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Code, which can also be found on
the Panel's website. If you are in any doubt as to whether or not you are
required to disclose a "dealing" under Rule 8, you should consult the Panel.
The Directors of MLIT and of SMIT accept responsibility for the information
contained in this announcement. To the best of the knowledge and belief of the
Directors of MLIT and SMIT (who have taken all reasonable care to ensure that
such is the case), the information contained in this announcement is in
accordance with the facts and does not omit anything likely to affect the
import of such information.
This Announcement does not constitute, or form part of, an offer or invitation
to purchase any securities.
Appendix
CALCULATION OF THE FORMULA ASSET VALUES
Each of SMIT and MLIT is, unless the context otherwise requires, referred to as
the "Relevant Company". Each of the Formula Asset Value ("FAV") per SMIT Share
and the FAV per MLIT Share shall be calculated as at the close of business on the
Calculation Date (being the date on which the Offer becomes or is declared
unconditional as to acceptances) and shall be the amount in pence which is the
result of the following formula, rounded to four decimal places (with 0.00005p
being rounded upwards):
FAV per share of the Relevant Company = A - B
-----
C
where
"A" is the aggregate of:
(i) the value of those investments of the Relevant Company which are listed,
traded, quoted or dealt in on a recognised stock exchange or on AIM, a
market of the London Stock Exchange, calculated by reference to the bid
quotations or, if not available, prices or the last trade prices for those
investments as at the close of business on the Calculation Date as derived
from the relevant exchange's recognised method of publication of prices for
such investments (any CFD accounts containing cash and positions to be
valued using the statement from the independent CFD administrator as at the
close of business on the Calculation Date);
(ii) the value of those investments of the Relevant Company which are dealt in
or traded on any publicly-available exchange or market (including any "over
the counter" market but excluding any exchange or market referred to in
sub-paragraph A(i) above), calculated by reference to the average of the daily
average of the prices marked for such investments on each of the five business
days up to and including the Calculation Date on which there were dealings or
trading in such investments as derived from the relevant market's recognised
method of publication of prices for such investments;
(iii) the value of those investments of the Relevant Company which are units in
unit trust or shares in open-ended investment companies, calculated by
reference to the prices or, in the case of units or shares in respect of which
cancellation and bid prices are quoted, the lower of the cancellation and bid
prices quoted as at the close of business on the Calculation Date by the
manager of the relevant unit trust or open-ended investment company for
holdings of the size held by the Relevant Company (and, for the avoidance of
doubt, any such investments which are listed, traded, quoted or dealt in on a
recognised stock exchange shall be valued under this sub-paragraph (iii) and
not under sub-paragraph A(i) above);
(iv) the value of those traded uncovered options and futures contracts to which
the Relevant Company is a party as at the close of business on the Calculation
Date which are traded on a stock, commodities, financial futures or other
securities exchange, calculated by reference to the official middle-market
closing prices on the Calculation Date as derived from the relevant exchange's
recognised method of publication of prices for such traded options and futures
contracts;
(v) the value of call options contracts to which the Relevant Company is a
party as at the close of business on the Calculation Date which are traded on a
stock held in the portfolio of the Relevant Company shall be valued at zero
unless the premium is still due in which case the position will be valued at
the premium value due;
(vi) the value of those investments of the Relevant Company which have
unexpired call options sold against an underlying stock held in the portfolio
of the Relevant Company shall be valued at the strike price of the call if the
bid price of the investment is above the strike price as at the close of
business on the Calculation Date;
(vii) the value of all other investments of the Relevant Company, calculated as
being their fair realisable values as at the close of business on the
Calculation Date as determined by agreement between the Company Secretary of
MLIT, on behalf of MLIT, and Capita Sinclair Henderson Limited ("Capita") or
the Board of Directors of SMIT ("Board of SMIT") on behalf of SMIT (or, failing
such agreement within seven days after the Calculation Date, as determined by
an independent expert);
(viii) the amount as at the close of business on the Calculation Date of any
sums due from debtors (including, for this purpose, any dividends or
distributions receivable on investments quoted ex-dividend or ex-distribution
on the Calculation Date and any interest accrued on any debt securities as at
the Calculation Date and any recoverable tax credit in relation thereto, but
excluding any dividend, distribution or interest not yet received which has
been taken into account in the value of any of the investments referred to in
sub-paragraphs A (i) to (vii) (inclusive) above or is unlikely to be received),
cash and deposits with or balances at banks, bills receivable and any money
market instruments of the Relevant Company (together with, in each case, any
accrued interest at that date less an accrual for any associated tax) and the
fair realisable value of any other tangible assets of the Relevant Company not
otherwise accounted for in sub-paragraphs A (i) to (vii) (inclusive) above,
less any provision for diminution of value which may be appropriate in respect
of any of sub-paragraphs A (i) to (vii) (inclusive) above (including provisions
for bad or doubtful debts), in each case as determined by agreement between the
Company Secretary of MLIT, on behalf of MLIT, and Capita or the Board of SMIT,
on behalf of SMIT (or, failing such agreement within seven days after the
Calculation Date, as determined by an independent expert); and
(ix) in the case of the FAV per MLIT Share only, the value of its Wimbledon
debentures will be valued at GBP40,483 which was the last valuation as provided
by the All England Lawn tennis Ground plc.
"B" is the aggregate of:
(i) in respect of each Relevant Company, the principal amounts as at the close
of business on the Calculation Date of any outstanding borrowings plus any
accrued but unpaid interest, commitment fees and other charges up to and
including that date and the higher of any premiums or penalties payable on
either early or final repayment if required;
(ii) the cost of closing as at the close of business on the Calculation Date
any open foreign exchange or other forward purchase or sale contract to which
the Relevant Company is a party on that date (save to the extent otherwise
taken into account in calculating the FAV per share of the Relevant Company);
(iii) in the case of the FAV per SMIT Share only, the cost of termination as at
the close of business on the Calculation Date of any investment advisory (Midas
have agreed that no termination fee will be due in the event the Offer becomes
unconditional), advisory, custody, supplier and administrative arrangements in
force on that date, including, but not limited to, any compensation or other
payments to be made to any investment manager, investment adviser,
administrator, secretary, director or employee of SMIT, such amount to include
irrecoverable value added tax (where applicable) but to exclude any tax relief;
(iv) in the case of the FAV per SMIT Share only, the cost of terminating as at
the close of business on the Calculation Date any other contracts or
arrangements whatsoever in force on that date to which SMIT is a party, but
exluding, for the purpose of this sub-paragraph B (iv), any investment
management, advisory and administrative arrangements in force at the close of
business on the Calculation Date;
(v) the total cost of any dividend or other distribution of the Relevant
Company declared on or before the Calculation Date, so far as not previously
paid;
(vi) in the case of the FAV per SMIT Share only, the costs, expenses and fees
of any independent expert appointed in connection with determining the Formula
Asset Values (of either/or both Relevant Companies), as well as any additional
accrued but unpaid costs and expenses to the Relevant Companies arising
directly as a result of and specifically in connection with the appointment of
an independent expert and the performance of its function, such amount to
include irrecoverable value added tax (where applicable) but to exclude any tax
relief;
(vii) the aggregate of the amount of any Panel on Takeovers and Mergers fees,
UKLA fees and printing costs to be borne equally by each Relevant Company in
respect of the Offer (including any VAT chargeable);
(viii) in the case of the FAV per SMIT Share only, the amount of all stamp duty
or stamp duty reserve tax and any other costs expected to be payable in respect
of the transfer of the SMIT Shares to MLIT pursuant to the Offer or by way of
compulsory acquisition following the Offer being declared unconditional, and
the estimated costs of transferring the SMIT investment portfolio to MLIT in
order to achieve the intended merger benefits as estimated by agreement between
the Company Secretary of MLIT, on behalf of MLIT, and Capita, or the Board of
SMIT (or, failing such agreement within seven days after the Calculation Date,
as determined by an independent expert);
(ix) the aggregate of the amount of all accrued but unpaid professional,
advisory, legal and other fees and other advertising costs and expenses
incurred by the Relevant Company in connection with the Offer, such amount to
include irrecoverable value added tax (where applicable) but to exclude any tax
relief including all such fees, costs and expenses relating to or in connection
with the determination of the Formula Asset Values (excluding any amounts
arising under sub-paragraph B (vi) above) but excluding for the purpose of this
sub-paragraph B (ix) all stamp duty,stamp duty reserve tax and transfer out
costs already provided for in accordance with sub-paragraph B (viii) above,
such amount to include irrecoverable value added tax (where applicable) but to
exclude any tax relief;
(x) the aggregate of the amount of any accrued but unpaid professional,
advisory, legal and other fees and advertising and other costs and expenses
whatsoever incurred by the Relevant Company otherwise than in connection with
the Offer, such amount to include irrecoverable value added tax (where
applicable) but to exclude any tax relief; and
(xi) an amount which fully reflects all other liabilities and obligations of
the Relevant Company whatsoever, including a fair provision for any contingent
liabilities (including any additional liabilities to taxation, whether or not
deferred, and any liabilities arising on liquidation) or losses (including
disputed claims), as at the close of business on the Calculation Date
determined by agreement between the Company Secretary of MLIT, on behalf of
MLIT, and Capita or The Board of SMIT, on behalf of SMIT (or, failing such
agreement within seven days after the Calculation Date, as determined by an
independent expert);
(xii) in the case of the FAV per SMIT Share only, a liquidity adjustment equal
to 50 per cent of the value (calculated in accordance with the principles in A
(i) and A(ii) above) of the Legacy Portfolio being the holdings in Property
Recycling Plc, Rapid Realisations Ltd and Angel Realisations Plc;
(xiii) in the case of the FAV per SMIT Share only, a provision of GBP1,520,578 in
respect of management warrants issued to a former investment manager, Knox
D'Arcy Asset Management Ltd ("KDAM") and certain other contingent liabilities
relating to KDAM, a transaction with an insurance company associated with KDAM
and VAT on fees paid to another former investment manager further information
about which is detailed in note 9 & 10 of SMIT's Half-Yearly Report for the six
months ended 31 December 2009.
and
"C" is the aggregate of:
(i) the number of shares in the Relevant Company in issue and
(ii)the number of shares capable of being issued on the exercise of
warrants or subscription rights as at the close of business on the
Calculation Date.
Notes:
1. For the purpose of the above calculations, the value of any investments,
other assets or liabilities denominated or valued in currencies other than
sterling shall be converted into sterling at the closing mid-point spot rate of
exchange between sterling and such other currencies in London as at the close
of business on the Calculation Date as published in the Financial Times or,
failing which, as certified by Midas (acting as an expert and not as an
arbiter).
2. In the case of sub-paragraphs A(i), (ii), (iii), (iv), (v) and (vi) above,
if there has been any general suspension of trading on the relevant stock,
commodities, financial futures or other securities exchange or market, or if it
was closed for business on the Calculation Date, the value of the relevant
investments, traded options or futures contracts shall be taken as at the close
of business on the immediately preceding date on which there was trading on
such exchange or market, provided that such date is not more than seven days
prior to the Calculation Date and save that, if there has been a material
adverse change in the financial position of any such underlying investment,
traded option or futures contract since the date by reference to which its
value is calculated but prior to the close of business on the Calculation Date,
a fair provision (as determined by agreement between the Company Secretary of
MLIT, on behalf of MLIT, and Capita or The Board of SMIT, on behalf of SMIT
(or, failing such agreement within seven days after the Calculation Date, as
determined by an independent expert)) shall be made to take account of such
adverse change in the value of the relevant investment, traded option or
futures contract.
3. Subject to note 2 above, in the case of sub-paragraphs A (i) to (vi)
(inclusive) above:
(i) where any such investment, traded option or futures contract is subject to
restrictions on transfer or a suspension of dealings or if no such published or
quoted prices are available in respect of any such investment, traded option or
futures contract, in each case as at the close of business on the Calculation
Date, the value of such investment, traded option or futures contract will be
calculated as at the close of business on the Calculation Date in accordance
with sub-paragraph A (vii) above; and
(ii) where any such investment, traded option or futures contract is, at the
close of business on the Calculation Date, subject to any right of any person
to acquire the same or any obligation on the Relevant Company to dispose of the
same, whether as a result of the Offer being made or becoming or being declared
unconditional or otherwise, at a price more or less than would otherwise be
determined in accordance with sub-paragraphs A (i) to (vi) (inclusive) above,
such investment, traded option or futures contract shall be valued at such
greater or lesser price unless such right or obligation is unconditionally and
irrevocably waived or lapses prior to the calculation of the FAV per share of
the Relevant Company otherwise being agreed or determined.
4. Subject to note 5 below, with regard to sub-paragraphs A (vii) and (viii)
above, the Company Secretary of MLIT and Capita or The Board of SMIT and, if
appointed, any independent expert shall have regard, inter alia, to the
following when determining the value of any investment or other asset (which
shall be calculated on the basis of a notional sale by a willing seller to a
willing buyer, without regard to any additional value that might be attributed
to such investment or other asset by any special category of potential
purchaser):
(i) the existence or exercise of any pre-emption rights or obligations in
respect of such investment or other asset or any other restrictions on the
transfer or disposal of the same which may exist or which may arise as a
consequence of the proposed acquisition by MLIT of SMIT or any SMIT Shares or
of the transfer of such investment or other asset to any party or of the
winding up of SMIT;
(ii) the terms and volumes of any recent dealings in, and marketability of,
such investment or other asset; and
(iii) the amount of any bona fide offer to acquire such investment or other
asset which may be made by any person and brought to the attention of the
Company Secretary of MLIT and Capita or the Board of SMIT or, if appointed, any
independent expert.
5. With regard to sub-paragraphs A (vii) and (viii) above, the Company
Secretary of MLIT, Capita, the Board of SMIT and, if appointed, any independent
expert shall, except in the case of debtors and tangible assets, be bound by
the actual amount of cash items and, in the case of debtors and tangible
assets, shall adopt the accounting policies used by the Relevant Company in its
latest audited financial statements.
6. If any liability referred to in sub-paragraphs B(i) to (xi) (inclusive)
above has not been determined by the date on which the calculations and
adjustments otherwise necessary to determine the FAV per share of the Relevant
Company have been made, there shall be included in "B" such amount in respect
of any such liability as shall be considered to be an appropriate estimate by
agreement between the Company Secretary of MLIT and Capita or the Board of SMIT
(or, failing such agreement within seven days after the Calculation Date, as
determined by an independent expert).
7. In agreeing any fair realisable value (in the case of sub-paragraphs A (vii)
and (viii) above) or estimating or determining the amount of any liabilities,
obligations or losses (in the case of sub-paragraphs B(viii) or B(xi) above),
or in making any determination under notes 2 and 6 above, the Company Secretary
of MLIT and Capita or The Board of SMIT shall act as experts and not as
arbitrator and any such determination shall be final and binding on all persons
and neither of them shall be under any liability to any person by reason
thereof or by reason of anything done or omitted to be done by them for the
purposes thereof or in connection therewith.
8. The independent expert referred to herein shall be a member of the
Association for Financial Markets in Europe ("AFME") (not connected with any of
the parties providing advice to SMIT or MLIT in connection with the Offer)
selected by the Company Secretary of MLIT the Board of SMIT or, in default of
such selection within 14 days after the Calculation Date, by the chairman for
the time being of AFME on the application of either the Company Secretary of
MLIT the Board of SMIT. Such member shall act as an expert and not as an
arbitrator and his determination shall (subject to any agreement to the
contrary between MLIT and SMIT) be final and binding on all persons and such
member shall not be under any liability to any person by reason of his
appointment or by anything done or omitted to be done by him for the purposes
of such appointment or in connection therewith.
9. Notwithstanding any of the above provisions, in the event that the valuation
of any investment or other asset of the Relevant Company in accordance with any
of such provisions, or the amount of any deduction made in accordance with
sub-paragraphs B (i) to (xi) (inclusive) above, is, in the opinion of the
Company Secretary of MLIT and the Board of SMIT, incorrect or unfair they may,
if they so agree, adopt an alternative method of valuation or deduction, as the
case may be.
END
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