RIT Capital Partners, the investment trust chaired by Lord Rothschild, said it has until June 27 to announce whether it will make a firm offer for Dundee-based Alliance Trust in accordance with the UK’s takeover code.
Alliance Trust received an informal takeover approach from RIT to create a quoted company with a stock market value of more than £5 billion.
The Dundee firm said it would consider any formal merger proposal received from RIT alongside the other options being considered as part of its ongoing strategic review.
US activist shareholder Elliott Advisors owns more than 10% of Alliance Trust shares and has long been putting pressure on Alliance to restructure.
Elliott would have a big influence on the outcome of any bid for Alliance Trust, with some analysts speculating Elliott would want cash for its stake in the Dundee firm and not shares.
Alliance Trust shares rose about 3.5% on Tuesday morning, while RIT shares fell about 1.5%.
RIT said on Tuesday: “The possibility of combining the two companies for the benefit of both sets of shareholders is at a very preliminary stage of consideration.
“Further analysis and discussion will determine whether such an outcome is indeed in the best interests of shareholders and can be achieved.
“There is no certainty that an offer by RIT for the share capital of Alliance Trust will be made.”
RIT Capital Partners has a stock market value of about £2.5 billion.
Alliance Trust has a stock market value of about £2.7 billion and is chaired by veteran Scottish financier Robert Smith.
Alliance Trust said: “The board of Alliance Trust notes recent press speculation relating to an unsolicited approach received by the board and confirms that RIT Capital Partners plc has approached Alliance Trust with an informal proposal for a merger of the two companies.
“However, no detailed terms have been provided by RIT with regard to the proposal or in respect of the company’s two principal operating subsidiaries.
“The board of Alliance Trust will incorporate any formal merger proposal received from RIT into its strategic review, alongside the other options being considered.”
In March, following a traumatic year for Alliance Trust, the firm said its 2015 group revenue fell to £200.2 million from £273.9 million in 2014 and pre-tax profit plunged to £145 million from £228.5 million in 2014.
Previous chair Karin Forseke departed on January 1, 2016, and Katherine Garrett-Cox, chief executive of subsidiary Alliance Trust Investments (ATI), stood down as chief executive of ATI on March 11 this year.
Read the full Alliance Trust statement here: http://www.alliancetrust.co.uk/pdfs/Strategic-review-and-statement-regarding-press-speculation.pdf