Invesco launches hostile takeover bid for STS

The trusts, managed by Invesco Perpetual and Martin Currie respectively, both sit in the UK Income and Growth sector. Over three years, Pigit, which is managed by Mark Barnett, has generated a net asset value total return of 41%, while STS, managed by Tom Maxwell, has returned 5%. Over five years, Pigit has returned 85%, while STS is down 3%.

Invesco Perpetual distribution director Andrew Watkins says: “Invesco is trying to drive more consolidation in the investment trust sector. We want to offer shareholders in STS good capital growth and the prospects of real dividend growth. Why should investors put up with mediocre performance when we can offer something better?” The move by Invesco is the first such bid since the Henderson Eurotrust failed in its 2002 attempt to take over the Charter European trust. The board of STS has yet to respond, but Charles Cade, head of research at investment trust analyst Close Wins, thinks it likely it will oppose the bid.

He says: “In our view, STS shareholders should wait for the board’s response before taking any action. Indeed, hostile bids rarely succeed as the incumbent board usually comes up with a cheaper proposal.”