F&C trust narrowly escapes merger

F&C Commercial Property Trust’s (FCPT) shareholders last week voted against a merger with Ignis Investments’ UK Commercial Property Trust (UKCPT).

While the merger had the backing of the trust’s largest shareholders, it also needed support from minority owners. However, 50.07% voted against the merger, meaning it failed to go through by just seven basis points.

Charles Cade, the head of research at the broker Numis, says the result is a remarkable victory for F&C Reit, the current investment manager of the £846m FCPT. (article continues below)

He says: “Even though the scheme had the approval of the independent shareholders, we felt Ignis still had the upper hand as shareholders tend to vote alongside board recommendations and are keen to support consolidation within the industry.”

However, Cade says Numis said the arguments in favour of the merger were not compelling and the main beneficiary would have been Ignis Asset Management at the expense of F&C Reit.

“F&C Reit put up a well-reasoned defence against the merger and promised significant reductions in its expense ratio, which will increase the dividend cover,” says Cade.

Despite F&C Reit’s victory, Cade adds the outcome of last week’s vote has left FCPT “somewhat in limbo”.

The board will consult shareholders about the next move. Cade says: “In our view, the position of some of the board members is likely to become untenable.”