Asia Dragon Trust PLC on Tuesday asked shareholders to take no action on a merger proposal announced by Ashoka WhiteOak Emerging Markets Trust PLC.

The FTSE 250-listed investment trust confirmed the approach by its smaller London-listed peer for a combination of assets, but asked shareholder to take no action, and said it will make a further announcement ‘in due course’.

Asia Dragon shares were up 7.6% to 412.00 pence on Tuesday afternoon in London for a market capitalisation of £651.1 million. AWEM shares were up 1.3% to 108.34 pence for a £34.9 million market cap.

For its part, Ashoka said shareholders representing 56% of its own shares support a merger of the two companies in principle. It noted the two trusts have a similar investment focus, with 55% of Asia Dragon’s portfolio overlapping with that of Ashoka WhiteOak Emerging Markets. Nine of Asia Dragon’s top 10 stocks also are part of the AWEM portfolio.

The merger would be conducted by means of a voluntary liquidation of Asia Dragon, with its shareholders being offered the choice of rolling their investment into new shares of AWEM or receiving cash, though the cash option would be capped at 50% of Asia Dragon’s shares.

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