Pigit has had to admit defeat in its attempted takeover of STS after receiving the backing of only 19.7% of shareholders in STS. It is believed the hostile battle has cost Pigit up to 350,000. In its defence proposals, STS offered shareholders three options. They could take cash, switch into Lowland, a UK equity investment trust, or opt for the new STS trust. Details on the successor STS trust are expected to be announced on May 17. John Moore, who runs the collective management service at Brewin Dolphin Securities, says this shows the difficulty of hostile takeovers of investment trusts. “It is very hard to get 50% approval from shareholders even if they are not happy with the trust’s performance. There have been few examples of successful hostile takeovers. But it can be argued that 20% is a high proportion of investors who are not happy with the current situation.” He adds that while STS has won the battle with Pigit, it may have lost the war. This is because STS is effectively being wound up following the hostile attack. Nick Greenwood of iimia says that according to the law of natural selection, Pigit should have succeeded because of its better performance than STS. “The problem is a mixture of apathy and the fact that many private client stockbrokers have forgone holding the voting rights of underlying shareholders. “Even if the stockbrokers had recommended to their clients that they should agree the Pigit offer, they might not have proactively accepted it. Some wealth managers may also feel it is not worth spending half a day trying to persuade clients to accept a deal. “One danger is that trust directors may become complacent, as they may feel hostile takeovers are unlikely to be successful. They are unlikely to feel under threat after seeing the Pigit attempt fail.” Nevertheless, it is suggested that there will be developments in the investment trust industry in the form of fund manager changes and talks “behind the scenes”.