Henderson European Focus Trust PLC and Henderson EuroTrust PLC have agreed to combine their portfolios, creating an investment company worth more than £700 million.

The two European-focused investment firms have signed a heads of terms deal to create Henderson European Trust.

This enlarged company will hold combined net assets of around £750 million and will be managed by the European equities team at the pair’s parent company Janus Henderson Investors. Combining the current market capitalisation of both investment trusts gives a valuation of around £712.6 million for the new entity.

The proposed merger, subject to approval by both companies’ shareholders, will be effected through the issue of new shares by Henderson European Focus and the transfer of Henderson EuroTrust’s assets.

So far, shareholders representing 35% and 38% of Henderson European Focus and Henderson EuroTrust, respectively, have indicated they will vote in favour of the scheme.

The boards of both companies believe the merger will progress smoothly, given the pair’s ‘complementarity of holdings and style’, which will reduce the need for portfolio realignment once the deal becomes effective.

It is also will result in more favourable management fee terms, with 60 basis points per annum on net assets up to £500 million, as opposed to the current structure of 65 basis points on net assets up to £300 million for both companies.

Shareholders are expected to vote on the proposals in May, with an anticipated conclusion by the end of June.

The chairs of Henderson European and EuroTrust commented: ‘The combined trust brings together two investment trusts with excellent long-term performance and highly regarded portfolio managers. We strongly believe this combination will create a single company which stands to be much more than the sum of its parts: enhanced scale resulting in reduced ongoing charges and improved market liquidity; recognised investment prowess backed by deep resources within the European team at Janus Henderson; structured at no cost of combination to ongoing shareholders.’

Henderson European Focus Trust shares were up 0.3% at 180.56 pence and Henderson EuroTrust shares up 4.0% at 155.00p in London on Thursday afternoon.

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