The proposed consolidation is set to be carried out as per section 110 of the Insolvency Act 1986. It will lead to a voluntary liquidation of IIT.
The agreement will see IIT obtaining new ordinary shares from Monks Investment in return for a rollover of its assets. IIT shareholders will also have the option to receive full or partial cash payments for giving away their shares in the company.
The deal, which awaits approval from the shareholders of both the firms, is expected to be carried out on the basis of formula asset value to formula asset value (FAV).
The FAV of both IIT and Monks Investment will be estimated as per the company’s own usual accounting strategies and their individual expenditure.
However, stamp duty and listing fees, which will be offered by the consolidated Monks Investment, as well as any unpaid declared dividends are not included in FAV.
In a statement, Independent Investment Trust said: “IIT shareholders who elect to realise all or part of their holding in the Company for cash will receive an amount in cash equal to the IIT FAV per share, less 2%, multiplied by the number of IIT shares they own.
“For the avoidance of doubt, there will be no limit on the number of IIT Shares which may be elected for the Cash Option.”
Upon the closing of the deal, which is subject to regulatory and tax approvals, Monks Investment is expected to be supervised as per the current norms.
The investment plans and aims of the company will not undergo any change. Spencer Adair, with support from Malcolm MacColl and Baillie Gifford’s Global Alpha team, will continue to supervise Monks Investment.