Henderson European to merge with Fidelity in £2.1bn trust deal

Source: Trustnet

Henderson European Trust is set to merge with Fidelity European Trust, creating an enlarged trust with £2.1bn in net assets that will be managed by Fidelity’s existing team of Sam Morse and Marcel Stötzel.

The deal will take place through a Section 110 scheme, with Henderson European’s assets transferred to the Fidelity trust.

Under Morse and Stötzel, the combined trust’s investment strategy will be focused on high-quality European stocks.

Stötzel said: “Our investment style focuses on finding companies with good prospects for cash generation and dividend growth over the longer-term, at attractive valuations, with positioning driven by opportunities at the individual stock level rather than macro developments.”

He added that Europe “has some of the world’s most innovative and global leading companies”, providing a “fertile hunting ground for stock pickers like us”.

The boards of both companies have backed the deal, citing benefits such as lower fees, greater visibility in the market and better trading liquidity.

Existing Henderson European shareholders will be offered a cash exit option for up to one-third of the trust’s net asset value (NAV), at a 1.75% discount to the Fidelity trust’s NAV.

For those who stay invested, management fees of the merged trust will be reduced on a sliding scale to 0.7% on the first £400m of NAV, 0.65% up to £1.4bn and 0.55% on assets in excess of £1.4bn.

The merged trust will also aim to keep its discount to NAV within the mid-single digits in normal market conditions.

This merger follows the unexpected resignation of Janus Henderson’s fund managers Tom O’Hara and Jamie Ross earlier this year, who moved to head the newly created European equity team at GAM Investments.

In January, the Henderson European board began a review process that included the proposal from Fidelity.

Vicky Hastings, Henderson European’s chair, said “a combination with Fidelity European Trust represents the best outcome for our shareholders”.

Completion of the merger is currently slated for the end of September.

James Carthew, co-founder and head of investment company research at QuotedData, said: “This looks like a great outcome for Henderson European shareholders and creates a true champion in this sector.”