BlackRock Throgmorton Trust Plc - Combination of BlackRock Smaller Companies Trust plc and BlackRock Throgmorton Trust plc
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Legal Entity Identifier: 5493003B7ETS1JEDPF59
Combination of
Greater scale, liquidity, and cost efficiencies
Combines two trusts with deep investment heritage
Well positioned for the significant value opportunity in the sector
The Board of
The Combination, if approved by both sets of Shareholders, will be effected by way of a scheme of reconstruction, which will include a members' voluntary winding up of the Company under section 110 of the Insolvency Act (the " Scheme ") and the issue of New BRSC Shares to Shareholders who are deemed to have elected to roll over their investment into the Enlarged BRSC.
As part of its continued focus on driving long-term Shareholder value, the Board, with the support of
In connection with the Proposals, a cash exit opportunity is being offered to Shareholders for up to 38 per cent. of THRG's issued share capital subject to a 1 per cent. discount (the "
Cash Option
").
The record date for participating in the Cash Option is
BRSC will also offer a cash exit opportunity to BRSC Shareholders for up to 28 per cent. of BRSC's issued share capital subject to a 1 per cent. discount.
As at the Latest Practicable Date,
THRG will shortly publish a circular (the " Circular ") which contains notices of two general meetings (the " General Meetings "), at which the Board is seeking Shareholders' approval of the proposed combination of THRG and BRSC and members' voluntary winding-up of THRG.
The Board strongly believes that the Proposals will deliver a number of significant benefits for its Shareholders, including:
-- Greater scale and improved liquidity - providing exposure to a diverse
range of high-quality UK Smaller Companies with excellent growth
prospects
-- Cost efficiencies - through reduced management fees
-- Immediate value realisation opportunity - through the Cash Option
-- Conditional exit opportunity - introduction of a triennial 100 per cent.
conditional tender offer, linked to performance against the Benchmark
-- Management expertise - enlarged portfolio management team with Roland
Arnold as lead portfolio manager, joined by Dan Whitestone , the current
portfolio manager of THRG, as co-manager.
"We are delighted to announce the proposed Combination, which will create a £780 million company that combines scale, efficiency, and proven investment expertise. The Enlarged
BRSC
will be well placed to capture the compelling
The proposed Combination follows a comprehensive review of available options by the Board and is focused on driving long-term value for Shareholders through greater scale, liquidity and cost efficiencies. Continuing Shareholders will benefit from a portfolio of high quality, diversified
Shareholders will be offered an initial cash exit, while continuing Shareholders will benefit from exposure to an enlarged company which will be well positioned to capitalise on the continuing significant value opportunity in the sector. The Board and BlackRock strongly believe in the long-term growth prospects of the
Benefits of the Proposals
The Board believes that the Proposals will have the following benefits for Shareholders:
-- Scale: The Enlarged BRSC is expected to have net assets of approximately
£780 million (on the basis of the trusts' respective net asset values as
at 16 February 2026 and assuming full take up of both the Cash Option
and the BRSC Tender Offer). This increased scale is expected to improve
secondary market liquidity for continuing Shareholders, support the
marketability of the Enlarged BRSC and provide the BRSC Board with
additional flexibility in pursuing discount control initiatives.
-- Continuity: shareholders in the Enlarged BRSC will see benefits from the
effective continuity of Investment Manager and closed-ended structure.
These include:
-- Combined portfolio manager expertise: Building on a combined investment
track record spanning several decades and investment cycles, the
Enlarged BRSC will bring together two highly experienced, well-regarded
UK small-cap managers, Roland Arnold and Dan Whitestone , who have
collaborated for over 10 years, and will co-manage a clear and distinct
investment strategy, remaining disciplined in their investment
philosophy and process that have proven successful over the long term.
-- Portfolio of quality growth companies: the Enlarged BRSC will create a
single BlackRock-managed UK smaller companies trust, merging two
diversified portfolios with approximately 75 per cent. overlap as at 31
January 2026 . The Enlarged BRSC will continue to prioritise quality
growth companies driven by strong management teams, leading market
positions, pricing power, robust balance sheets, healthy margins, strong
earnings growth and high levels of cash conversion.
-- Closed-ended vehicle: the investment trust structure will continue to
allow for investment in less liquid securities, where a longer-term
investment horizon and the ability to invest patiently is often
required, and will continue to offer the ability to smooth dividend
payments over time, to use gearing and to uphold strong governance
standards through an independent board of directors.
-- Attractive dividend policy: the Enlarged BRSC's dividend policy is
expected to build on the track record achieved by BRSC, categorised as a
'Dividend Hero' by the AIC as a result of delivering annual dividend
growth for more than 20 years. With effect from 1 March 2026 , BRSC
intends to pay dividends on a quarterly basis.
-- Compelling long-term prospects: the Board and BlackRock believe UK
smaller companies have the potential to outperform their larger
counterparts over the long-term, consistent with the 2.8 per cent.
annualised outperformance over the period December 1955 to January 2026 ,
and believe in the Enlarged BRSC's ability to outperform its benchmark
(being the Deutsche Numis Smaller Companies plus AIM (excluding
Investment Companies) Index) over the long-term.
-- THRG and BRSC have both outperformed the Deutsche Numis Smaller
Companies plus AIM (excluding Investment Companies) Index over the last
10 years to 31 January 2026 , having delivered NAV total returns of
approximately 129 per cent. and 97 per cent., respectively, compared to
the benchmark return of approximately 86 per cent.
-- The sector has faced significant challenges over the last few years,
caused by greater outflows leading to significant under-valuation, which
has impacted short term performance. However, UK smaller companies
continue to display robust fundamentals and good long-term growth
prospects. Given investment cycle trends, the portfolio managers are
confident that there remain significant opportunities within the asset
class for the patient investor.
-- The Board and BlackRock believe that the Combination strongly positions
the Enlarged BRSC to capitalise on any change in sentiment towards UK
smaller companies.
-- Initial cash exit opportunity: while the Board believes the benefits and
strategic rationale of the Combination are compelling for continuing
Shareholders, all Shareholders will be offered a cash exit opportunity
in connection with the Scheme, subject to a 1 per cent. discount, for up
to 38 per cent. of THRG's issued share capital (excluding shares held in
treasury).
-- Triennial conditional exit opportunity: subject to completion of the
Combination, the Enlarged BRSC will offer a triennial
performance-related tender offer for up to 100 per cent. of its issued
share capital (excluding shares held in treasury) at a 4 per cent.
discount to NAV (less costs), which will be triggered if the Enlarged
BRSC underperforms its benchmark, the Deutsche Numis Smaller Companies
plus AIM (excluding Investment Companies) Index, over the relevant
performance period.
-- Reduced management fees: subject to completion of the Combination,
BlackRock has agreed to a reduction in the annual management fee payable
by the Enlarged BRSC to: 50 bps on NAV up to £500 million; 47.5 bps on
NAV in excess of £500 million and up to £750 million; and 45 bps on NAV
in excess of £750 million. This will be the lowest management fee for
investment companies in the AIC's UK Smaller Companies sector that do
not have a performance fee.
-- BlackRock Cost Contribution: continuing shareholders will be materially,
if not entirely, insulated from the costs of the Proposals as a result
of the application of the BlackRock Cost Contribution, by way of a fee
waiver equal to six months of the reduced management fee that would
otherwise be payable by the Enlarged BRSC following implementation of
the Scheme based on the estimated Net Asset Value of the Enlarged BRSC
as at the Calculation Date.
-- Lower ongoing charges: The Proposals will reduce fixed costs
proportionately to NAV and, in combination with the reduced management
fees, deliver a competitive OCR for the Enlarged BRSC estimated to be
0.63 per cent. (which excludes the benefit of the BlackRock Cost
Contribution) compared to BRSC's OCR of 0.8 per cent. and THRG's average
OCR over the last five years to 30 November 2025 of 0.82 per cent. with
performance fees included. This will be the lowest OCR for investment
companies in the AIC's UK Smaller Companies sector that do not have a
performance fee.
Summary Information on BRSC and the Enlarged BRSC
BRSC is a closed-ended investment company incorporated in
The Enlarged BRSC will largely follow BRSC's current investment strategy, seeking to achieve long- term capital growth through investing predominantly in
The Enlarged BRSC's portfolio will be managed by
Under this new arrangement, Shareholders in the Enlarged BRSC will benefit from the experience and expertise of both portfolio managers as well as the wider resources of BlackRock's highly experienced Emerging Companies team, with its excellent access to company management and research across the
The Enlarged BRSC's investment objective and investment policy (including as proposed to be amended in connection with the Scheme) are set out in Part 5 of the Circular.
With effect from
It is intended that, following completion of the Scheme,
BRSC is putting forward a tender offer to BRSC Shareholders for up to 28 per cent. of the BRSC Shares in issue, excluding treasury shares (the "
BRSC Tender Offer
"), to be carried out prior to implementation of the Scheme. The BRSC Tender Offer will be implemented through the establishment of a tender pool, which will comprise assets to be realised for the benefit of the BRSC Shareholders participating in the BRSC Tender Offer (the "
The BRSC Tender Offer is conditional upon, amongst other things, the approval of BRSC Shareholders. The Scheme is conditional, amongst other things, on the approval by BRSC Shareholders of the BRSC Tender Offer and the BRSC Tender Offer not having been terminated.
Subject to completion of the Scheme, the Enlarged BRSC will offer a triennial performance-related tender offer for up to 100 per cent. of its issued share capital (excluding shares held in treasury) at a 4 per cent. discount to NAV (less costs), which will be triggered if the Enlarged BRSC underperforms its benchmark, the Deutsche Numis Smaller Companies plus AIM (excluding Investment Companies) Index, over the relevant performance period. It is expected that the first such tender offer, were it to be triggered, would be in 2029.
While the BRSC Board regards BRSC's share rating at any particular time as primarily a reflection of sentiment towards the sector alongside portfolio performance, both in absolute terms and relative to the peer group, it recognises that there are a number of other factors which can have a material impact in the context of driving demand for the BRSC Shares. The proposals for the Combination and the Enlarged BRSC include a number of features which are designed with that in mind: the refreshed investment proposition; the new highly competitive management fee structure; the attractive estimated OCR of the ongoing vehicle; and the triennial 100 per cent. performance-related conditional tender offer to be made available to BRSC Shareholders. The BRSC Board is also introducing quarterly dividend payments in place of the current bi-annual dividend payments from
Saba Agreements
As at the Latest Practicable Date, Saba (including the Saba Investment Vehicles) was interested in 17.8 per cent. of the voting rights in the Company and 10.4 per cent. of the voting rights of BRSC. As at the Latest Practicable Date, Saba (including the Saba Investment Vehicles) beneficially owned 1.7 per cent. of the Ordinary Shares and 2.4 per cent. of the BRSC Shares. The Company has received an irrevocable undertaking from Saba pursuant to which Saba has undertaken, among other things, to use best endeavours to: (i) procure that all the votes attaching to the Ordinary Shares in respect of which the Saba Investment Vehicles have beneficial interests or are otherwise able to control the right to exercise voting rights at the relevant record dates for voting are cast in favour of the Resolutions; and (ii) procure that an election for the Cash Option is made in respect of all of the Ordinary Shares which are beneficially owned by the Saba Investment Vehicles (including beneficial interests held through any financial instruments) as at the latest date for electing for the Cash Option under the Scheme.
BRSC and Saba are currently party to a standstill agreement whereby Saba has given BRSC a number of undertakings including that Saba will not put forward proposals to BRSC Shareholders or requisition a general meeting of BRSC, such undertakings to expire on the earlier of the day following BRSC's annual general meeting in 2027 or
Saba and BRSC have agreed to amend the terms of the Standstill Agreement to extend the term of the agreement to
Conditions
Implementation of the Proposals is subject to a number of conditions, including:
-- the Directors and the BRSC Directors resolving to proceed with the
Scheme;
-- the passing of the Resolutions and any conditions of such Resolutions
being fulfilled;
-- the BRSC Share Allotment Authority being approved by BRSC Shareholders;
-- the BRSC Tender Offer being approved by BRSC Shareholders and not having
been terminated, and the Saba Tender Condition being satisfied (at the
BRSC Board's sole discretion);
-- an election for the Cash Option being made in respect of all (or
substantially all, to be determined by the Board and the BRSC Board, in
their sole discretion) of the Ordinary Shares beneficially owned by the
Saba Investment Vehicles, or in respect of which the Saba Investment
Vehicles have an economic interest, or such lesser number as may be
agreed between the Board and the BRSC Board; and
-- the London Stock Exchange agreeing to admit the New BRSC Shares to
trading on the Main Market, subject only to allotment.
If any condition is not satisfied, the Proposals will not become effective, the Company will not proceed with the winding-up and instead will continue in existence. In these circumstances, the Directors will reassess the options available to the Company at that time.
Scheme Mechanics and Entitlements under the Scheme
Under the Scheme, which is conditional upon, among other things, the approval of Shareholders:
(a)
all Shareholders will be entitled to elect to receive cash in respect of some or all of their Ordinary Shares (the "
Cash Option
"). The record date for participating in the Cash Option is
The maximum number of Ordinary Shares (in aggregate) that can be elected for the Cash Option is 38 per cent. of the total number of Ordinary Shares in issue (excluding shares held in treasury) as at the Calculation Date (the " Maximum Cash Option Shares "). Shareholders are entitled to elect for the Cash Option in an amount in excess of 38 per cent. of their individual holdings of Ordinary Shares (being the " Basic Entitlement ", and such excess amount being an " Excess Application "). However, if aggregate Elections for the Cash Option exceed the Maximum Cash Option Shares, Shareholders who have made an Election for the Cash Option in excess of their Basic Entitlement shall have their Excess Applications scaled back in a manner which is, as near as practicable, pari passu and pro rata among all Shareholders who have made such Excess Applications such that the aggregate number of Ordinary Shares so elected will equal the Maximum Cash Option Shares; and
(b) eligible Shareholders will by default receive New BRSC Shares (the " Rollover Option ") to the extent that they do not make a valid election for the Cash Option in respect of some or all of their Ordinary Shares or to the extent that their elections for the Cash Option are scaled back in accordance with the Scheme. New BRSC Shares issued pursuant to the Rollover Option will be issued on the basis of the ratio of the THRG Rollover FAV per Share to the BRSC FAV per Share.
On or shortly after the Calculation Date, the Board and BlackRock, in consultation with the proposed Liquidators, will finalise the division of the Company's assets into three separate and distinct pools (the
Assets of an aggregate value equal to the THRG Cash Pool FAV will be segregated into the
The exact timing of payment of Cash Entitlements will depend on the number of Ordinary Shares elected for the Cash Option and the realisation period for assets in the
In allocating cash and other assets between the
Ahead of the Effective Date, the Company's portfolio will be realigned or realised in a cost-effective manner to ensure that the Company has sufficient cash to fund the
The "
THRG Rollover FAV
" will equal the Net Asset Value at the Calculation Date less the value of any cash and other assets or liabilities appropriated to the
The "
BRSC FAV
" will equal the Net Asset Value of BRSC as at the Calculation Date (calculated in accordance with its normal accounting policies, on a cum income basis with debt at fair value), adjusted as follows: (i) reduced by the direct costs of the Proposals to be borne by BRSC but not accrued in the BRSC Net Asset Value as at the Calculation Date; (ii) reduced by the value of the
Costs of Implementing the Scheme
Each of THRG and BRSC will bear their own costs in relation to the Proposals.
The fixed costs of the Scheme payable by the Company are expected to be approximately £1.3 million inclusive of VAT which, for the purposes of this calculation, is assumed to be irrecoverable where applicable. The estimate of the Company's costs excludes the Liquidators' retention to cover unknown or unascertained liabilities (estimated at £100,000) and does not take account of any dealing costs which will be incurred by the Company in disposing of or realigning its assets in order to fund the
To the extent that some or all of the Retention or the Retained Assets remain when the Liquidators decide to close the liquidation, this will be returned in cash to Shareholders that were on the Register as at the Scheme Entitlements Record Date.
BlackRock has agreed to make a contribution to the costs of the Proposals for the benefit of continuing shareholders. Subject to the Scheme becoming effective, BlackRock will waive the reduced management fee that would otherwise be payable to it by the Enlarged BRSC for a period of six months following the Effective Date based on the estimated Net Asset Value of the Enlarged BRSC as at the Calculation Date (the " BlackRock Cost Contribution "). Based on the respective NAVs of BRSC and THRG as at the Latest Practicable Date, and assuming full take up of both the BRSC Tender Offer and the Cash Option, the value of the BlackRock Cost Contribution would be approximately £1.9 million.
The benefit of the BlackRock Cost Contribution will be apportioned between the BRSC FAV and the THRG Rollover FAV as follows, the respective shares of the BlackRock Cost Contribution being the " BRSC BlackRock Contribution " and the " THRG BlackRock Contribution ", respectively.
In the first instance, the proportion of the BlackRock Cost Contribution allocated to each of the BRSC FAV and the THRG Rollover FAV shall be determined pro rata by reference to the relative values of the BRSC FAV and the THRG Rollover FAV prior to any allocation of the BlackRock Cost Contribution.
Thereafter, in the event that the pro rata allocation of the BlackRock Cost Contribution results in:
a) the Proposals being NAV accretive for THRG continuing shareholders and NAV dilutive for BRSC continuing shareholders, the THRG BlackRock Contribution will be reduced, and the BRSC BlackRock Contribution correspondingly increased, so that the Proposals are not dilutive for BRSC continuing shareholders, save to the extent that to do so would result in the Proposals becoming NAV dilutive to THRG continuing shareholders; or
b) the Proposals being NAV accretive for BRSC continuing shareholders and NAV dilutive for THRG continuing shareholder, the BRSC BlackRock Contribution will be reduced, and the THRG BlackRock Contribution correspondingly increased, so that the Proposals are not dilutive for THRG continuing shareholders, save to the extent that to do so would result in the Proposals becoming NAV dilutive to BRSC continuing shareholders.
In the event that the Scheme does not proceed then each of the Company and BRSC will bear its own costs associated with the Scheme.
Dividends
THRG
The Board intends to announce a final interim dividend for the financial year ended
As an investment trust, the Company is not permitted to retain more than 15 per cent. of its income in any accounting period. If the Scheme is successful, this condition must be met in the shortened accounting period commencing on
Both the final interim dividend and the pre-liquidation interim dividend will have a record date and payment date prior to the Effective Date.
BRSC
In the ordinary course of events, BRSC would pay a final dividend in respect of the financial year ending
Under its dividend policy, effective from
General Meetings
The implementation of the Proposals will require two general meetings of the Company. The notices convening the First General Meeting (to be held at
The Resolutions to be proposed at the General Meetings, on which all Shareholders may vote, are as follows:
First General Meeting
The resolutions to be considered at the First General Meeting (both of which will be proposed as special resolutions) will, if passed, approve the terms of the Scheme and associated amendments to the Articles set out in Part 3 of the Circular, authorise the Liquidators to enter into and give effect to the Transfer Agreement with BRSC, purchase the interests of any Dissenting Shareholders and authorise the Liquidators to apply to cancel the listing of the Ordinary Shares with effect from such date as the Liquidators may determine.
Each Resolution will require at least 75 per cent. of the votes cast in respect of it, whether in person or by proxy, to be voted in favour in order for it to be passed. The Scheme will not become effective unless and until, inter alia, the Resolution to be proposed at the Second General Meeting has also been passed.
Second General Meeting
At the Second General Meeting, a special resolution will be proposed which, if passed, will place the Company into liquidation, appoint the Liquidators and agree the basis of their remuneration, instruct the Company Secretary to hold the books to the Liquidators' order and provide the Liquidators with appropriate powers to carry into effect the amendments to the Articles made at the First General Meeting. The Resolution to be proposed at the Second General Meeting is conditional upon the passing of the Resolutions at the First General Meeting, the
The Resolution will require at least 75 per cent. of the votes cast in respect of it, whether in person or by proxy, to be voted in favour in order for it to be passed.
Recommendation
The Board, which has been so advised by Winterflood, considers the Proposals and the Resolutions to be proposed at the General Meetings to be in the best interests of Shareholders as a whole. In providing its advice, Winterflood has relied on the Board's commercial assessment of the Proposals.
Accordingly, the Board unanimously recommends Shareholders to vote in favour of the Resolutions, as the Directors intend to do in respect of their own beneficial holdings which total 48,939 Ordinary Shares (representing approximately 0.06 per cent. of the Company's total voting rights) as at the Latest Practicable Date.
Choosing between the options available under the Proposals will be a matter for each Shareholder to decide and will be influenced by their individual investment objectives and by their personal, financial and tax circumstances. Accordingly, Shareholders should, before deciding what action to take, read carefully all the information in the Circular. The Board cannot, and does not, give any advice or recommendation to Shareholders as to whether, or as to what extent, they should elect for any of the options under the Proposals. Shareholders who are in any doubt as to the contents of the Circular or as to the action to be taken are encouraged to seek their own personal financial advice from an appropriately qualified independent financial adviser.
In relation to BRSC, the Circular is not a prospectus and does not constitute an offer of any securities for sale or subscription. Further information on BRSC is available on BRSC's website www.blackrock.com/uk/brsc and in the Information Document which is available on BRSC's website www.blackrock.com/uk/brsc and THRG's website www.blackrock.com/uk/thrg. The contents of BRSC's website and the Information Document do not form part of the Circular, and the Board takes no responsibility for the content of BRSC's website or the Information Document.
Expected Timetable of Principal Events
2026
Cash Option Record Date 6.00 p.m. on 23 February
Latest time and date for receipt of
proxy appointments in respect of the 10.00 a.m. on 24 March
First General Meeting
First General Meeting 10.00 a.m. on 26 March
Latest time and date for receipt of 1.00 p.m. on 9 April
Forms of Election and TTE Instructions
Scheme Entitlements Record Date 6.00 p.m. on 9 April
Calculation Date close of business on 9 April
Ordinary Shares disabled in CREST (for close of business on 9 April
settlement)
Trading in the Ordinary Shares on the 7.30 a.m. on 10 April
London Stock Exchange is suspended
Latest time and date for receipt of
proxy appointments in respect of the 10.00 a.m. on 14 April
Second General Meeting
Reclassification of the Ordinary Shares 8.00 a.m. on 15 April
Suspension of listing of Reclassified 7.30 a.m. on 16 April
Shares
Second General Meeting 10.00 a.m. on 16 April
Effective Date for implementation of 16 April
the Scheme
Announcement of the results of
Elections, the THRG Cash FAV, the THRG 16 April
Rollover FAV per Share and the BRSC FAV
per Share
CREST accounts credited with, and 8.00 a.m. on 17 April
dealings commence in, New BRSC Shares
Certificates despatched in respect of by 30 April
New BRSC Shares
Cheques despatched, and CREST accounts as soon as practicable following the
credited with cash, to Shareholders who Effective Date
elect for the Cash Option*
Cancellation of listing of Reclassified as soon as practicable after the payment
Shares of Cash Entitlements following the
Effective Date
* The exact timing of payment of Cash Entitlements will depend on the number of Ordinary Shares elected for the Cash Option and the realisation period for assets in the
Note
: All references to time in the Circular are to
Defined terms used in this announcement shall, unless the context requires otherwise, have the meanings ascribed to them in the Circular.
The Circular will shortly be available for inspection at the National Storage Mechanism which is located at https://data.fca.org.uk/a/nsm/nationalstoragemechanism and on the Company's website at www.blackrock.com/uk/thrg
END
Enquiries:
Financial Adviser to
Company Secretary to
This announcement contains information that is inside information for the purposes of Article 7 of the
Important Information
The information in this announcement is for background purposes only and does not purport to be full or complete.
This announcement is not for publication or distribution in or into
Moreover, the New BRSC Shares have not been, nor will they be, registered under the applicable securities laws of
The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market movements. When you sell your investment, you may get back less than you originally invested. Figures refer to past performance and past performance should not be considered a reliable indicator of future results.
This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "might", "will" or "should" or, in each case, their negative or other variations or similar expressions. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding THRG's or BRSC's respective financial positions, strategies, plans, proposed acquisitions and objectives, are forward-looking statements.
Release
