F&C bids to halt merger and keep contract for property trust

F&C REIT is seeking to halt the merger of the F&C Commercial Property trust it manages with UK Commercial Property trust by offering an improved management contract.

Today the Ignis-managed UK Commercial Property Trust (UKCPT) set out the terms for a merger which has already won the backing of F&C Commercial Property (FCPT) trust's board.

It acknowledged however that although Ignis, which owns 66% of UKCPT, is backing the deal because it is a related party the deal will ultimately be decided by minority shareholders.

In its statement today F&C REIT said: 'F&C REIT has been seeking to develop an alternative proposal with the Board of FCPT which would benefit all shareholders in the company, and will continue to do so. Our proposal would provide a significant reduction in the company's total expense ratio; continuity of asset management, including the retention of Richard Kirby as lead manager; and it would preserve investor choice between two distinct, large and liquid vehicles.'

Ignis still hopes to have justified the deal to shareholders on both sides by the time they convene to vote at their respective EGMs scheduled for early August. 

Gary Hutchinson, an investment director on the Ignis property team, is confident the deal will go through. He said: 'We have worked closely with the likes of Schroders and Kleinwort Benson a number of other shareholders on both sides to make sure they're on side.

'They [the shareholders] are supportive of our proposals and we are confident of getting their backing. We have worked closely with G&N Securities and have a good relationship with shareholders. We have made sure we have done the appropriate thing.' 

There are also rumours swirling that another investment trust could launch a rival bid for FCPT, something Hutchinson thinks is highly unlikely. 'It's hard to envisage a circumstance in which a rival bid could come about given the support we have from the boards and major shareholders.'  

Yet some sources have privately conceded that there could be more value to unlock from a merger between FCPT and another property trust, for example if one of the asset management companies involved bore the full costs of the deal. This is a common tactic but one Ignis has not yet chosen to use. As of yet it is true that no letters of intent have formally been disclosed from shareholders.

Today Lex column in the Financial Times underlined how the deal is far from a foregone conclusion.