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Liontrust to acquire Alliance Trust unit for £30M

Liontrust Asset Management Plc said Dec. 15 that it entered into a conditional share purchase agreement to acquire Alliance Trust Plc unit Alliance Trust Investments Ltd. for £30 million.

The ATI investment team led by Peter Michaelis, along with the 11 investment funds it manages, will transfer to Liontrust as part of the deal, adding to its existing seven fund management teams.

The acquisition is expected to increase Liontrust's AUM by approximately £2.3 billion, bringing its total AUM to more than £8 billion. The deal, subject to regulatory approvals, is expected to close in April 2017.

"It is a good time for Liontrust to diversify into this investment style because of the opportunities that the U.K. retail, institutional and European markets offer sustainable investment funds," Liontrust said in a statement.

Alliance Trust said the deal is the result of a strategic review launched earlier in 2016, which will see it move from a single-manager investment management approach to one that uses multiple equity managers. Willis Towers Watson will be appointed the trust's overall investment manager.

The company increased the target for its equity portfolio to outperform the MSCI All Country World Index by 2% per year from 1%. It will also introduce a program of share buybacks designed to reduce the discount to net asset value at which its shares trade.

Consideration for the Liontrust sale will comprise £10 million in cash, £17 million in Liontrust shares and £3 million in cash contingent on the level of AUM two years after completion. Net proceeds to Alliance Trust will be no less than £25 million, it said, compared to the business' book value of £19.8 million at the end of June.

Alliance Trust said that although it does not have to provide shareholders the opportunity to vote on the change in management of the equity portfolio, it will do so regardless. A general meeting is expected to be convened early in 2017.

"We are confident that this exciting and differentiated investment approach will help to improve Alliance Trust's performance on a consistent basis," Chairman Robert Smith said. "Accordingly, we have doubled the level targeted for outperformance, reaffirmed our ambition to continue our track record of year-on-year dividend growth, yet at a competitive cost."