REG-Fidelity European Trust Plc: Proposed combination with Henderson European Trust plc ("HET")

Fidelity European TrustAnnouncement

Today 07:02

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE NOT FOR RELEASE,
PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART,
IN, INTO OR FROM THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND
POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA) (THE
"UNITED STATES"), AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH
AFRICA, ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA OR ANY OTHER
JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.

This announcement is not an offer to sell, or a solicitation of an offer to
acquire, securities in the United States or in any other jurisdiction in which
the same would be unlawful. Neither this announcement nor any part of it shall
form the basis of, or be relied on in connection with or act as an inducement
to enter into, any contract or commitment whatsoever.

19 June 2025

Fidelity European Trust PLC

(the "Company" or "FEV")

Proposed combination with Henderson European Trust plc ("HET")
* The Boards of FEV and HET have agreed heads of terms in respect of a
proposed combination of the two companies pursuant to a scheme of
reconstruction of HET under section 110 of the Insolvency Act 1986.
* The enlarged FEV will continue as the combined entity (the "Combined
Entity") and, with anticipated net assets of over £2.1 billion,(1) is
expected to benefit from enhanced marketability and profile as the flagship UK
closed-ended vehicle for investment in Europe. 
* The Combined Entity will continue to be managed by Fidelity in accordance
with FEV's existing investment objective and policy. Sam Morse and Marcel
Stötzel, FEV's experienced and award-winning portfolio managers, will
continue as the portfolio managers.
* FEV will introduce lower tiered management fee arrangements as part of the
Proposals which, together with the economies of scale of the Combined Entity,
are expected to result in a material reduction to the Company's ongoing
charges ratio.
* Fidelity will make a significant contribution to the costs of the proposals,
equivalent to a waiver of 12 months of management fees in respect of the
assets that roll over from HET. The Fidelity contribution, which is currently
estimated to have a value of approximately £2.4 million, is expected to fully
offset FEV's direct transaction costs, such that FEV shareholders are not
expected to suffer any NAV dilution from the direct costs of the combination.
(1) 
* The Company's discount management policy will also be enhanced such that FEV
will seek to maintain any discount to net asset value in mid-single digits in
normal market conditions.
Introduction

The Boards of FEV and HET are pleased to announce that the companies have
entered into heads of terms for a combination of the two companies. This
follows a thorough review by the HET Board of the potential options for HET's
future. The combination, if approved by the companies' respective
shareholders, will be effected by way of a scheme of reconstruction pursuant
to section 110 of the Insolvency Act 1986 (the "Scheme"), resulting in the
voluntary winding up of HET and the associated transfer of part of its cash,
assets and undertaking to the Company in exchange for the issue of new
ordinary shares in FEV (the "New FEV Shares") to continuing HET shareholders
(together the "Proposals").

Following implementation of the Proposals, the enlarged FEV will continue to
be managed, in accordance with its existing investment objective and policy,
by FIL Investments International ("Fidelity") with FEV's experienced and
award-winning portfolio managers, Sam Morse and Marcel Stötzel, continuing as
the portfolio managers.

The Proposals will be subject to, amongst other things, approval by the
shareholders of both FEV and HET in addition to regulatory and tax approvals.

Benefits of the Proposals

The FEV Board believes that, if implemented, the Proposals will have a number
of benefits for existing and future FEV shareholders, including:
* Unparalleled scale and enhanced profile: the Combined Entity is anticipated
to have net assets in excess of £2.1 billion.(1) As the flagship UK
closed-ended vehicle for investment in Europe, the Combined Entity is expected
to benefit from enhanced profile and marketability. 
* Lower tiered management fees: Fidelity has agreed that, with effect from the
admission to listing and trading of the New FEV Shares, the annual management
fee payable by the Combined Entity will be reduced to: 0.70 per cent. of net
assets of less than £400 million; 0.65 per cent. of net assets between £400
million and £1.4 billion; and 0.55 per cent. of net assets in excess of £1.4
billion (the "Revised Fee Arrangements").(2) This is currently expected to
result in a blended annual management fee rate for the Combined Entity of
0.625 per cent. of net assets on completion of the Proposals.(1)
* Lower ongoing charges ratio ("OCR"): owing to the Revised Fee Arrangements
and the economies of scale of the Combined Entity, the Proposals are expected
to reduce the Company's OCR significantly, allowing it to target an
illustrative OCR of 0.68 per cent. for the Combined Entity, representing a
material improvement to FEV's last reported OCR of 0.76 per cent.(1)(3) 
* Enhanced liquidity: the scale of the Combined Entity, as the UK's largest
and most liquid European-focused investment trust, is also expected to further
enhance secondary market liquidity for the Company's shareholders (including
in relation to its enhanced discount control policy).
* Significant cost contribution from Fidelity: Fidelity has agreed to make a
material contribution towards the costs of the Proposals, equivalent to a
waiver of 12 months of management fees that would otherwise be payable in
respect of the assets to be transferred to FEV under the Scheme. This is
expected to fully offset the direct transaction costs for FEV shareholders.(1)

* Enhanced discount management policy: in the light of the Proposals, the FEV
Board has taken the decision to enhance its discount management policy such
that the Company will seek to maintain any discount to net asset value in
mid-single digits in normal market conditions.
* Shareholder register: the implementation of the Proposals would allow a
number of shareholders to consolidate their holdings across FEV and HET whilst
also creating a more diversified shareholder base through a combination of the
two share registers.
Further details of the Scheme

Under the Scheme, eligible HET shareholders will be deemed to have elected to
receive New FEV Shares in respect of their HET shares (the "Rollover Option")
save to the extent that they validly elect to receive cash in respect of some
or all of their HET shares (the "Cash Option").

The number of New FEV Shares issued to HET shareholders pursuant to the
Rollover Option will be determined on a formula asset value ("FAV") for FAV
basis.

The FAV of each company will be calculated based on each companies' respective
net asset values (cum income with debt at par value) as at the Calculation
Date, subject to adjustments for any declared but unpaid dividends, the
allocation of transaction costs, the financial value of the Fidelity Cost
Contribution (discussed below) and, in the case of HET, also taking account of
the liquidators' retention and the application of the Cash Option Discount
(also discussed below).

The Cash Option is limited to 33.3 per cent. of HET's shares in issue
(excluding treasury shares). Should total elections for the Cash Option exceed
this 33.3 per cent. threshold, excess applications will be scaled back into
New FEV Shares in a manner which is, as near as practicable, pari passu and
pro rata among all HET shareholders who have made such excess applications.

The Cash Option will be priced at a 1.75 per cent. discount (the "Cash Option
Discount") to HET's residual FAV per share as at a calculation date to be
agreed between FEV and HET (the "Calculation Date"), less the further costs of
any realisations required to fund the Cash Option. The aggregate value of the
Cash Option Discount will be credited to the HET rollover FAV for the benefit
of HET shareholders rolling over their shareholdings in HET into the Combined
Entity.

The Boards of HET and FEV are also in discussions with the holders of HET's
privately placed loan notes (the "HET Loan Notes") to agree their treatment in
connection with the Scheme. Further details will be set out in the shareholder
documentation to be published by the companies in respect of the Scheme in due
course.

In accordance with customary practice for schemes of reconstruction pursuant
to section 110 of the Insolvency Act 1986 involving investment companies, the
City Code on Takeovers and Mergers is not expected to apply to the proposed
combination via the Scheme.

Costs of the Proposals and Fidelity Contribution

Each company will bear its own costs incurred in relation to the Proposals.

As noted above, Fidelity has undertaken to make a material contribution
towards the costs of the Proposals by means of a waiver of the management fees
that would otherwise be payable in respect of the assets to be transferred by
HET to FEV pursuant to the Proposals for the 12 month period immediately
following the Scheme becoming effective, calculated by reference to the New
Fee Arrangements (the "Fidelity Cost Contribution"). The financial value of
the Fidelity Cost Contribution is currently estimated to be approximately
£2.4 million.(1)

For the purposes of the Scheme, the financial value of the Fidelity Cost
Contribution (calculated as at the Calculation Date) will first be credited to
the Company's FAV against any and all FEV transaction costs up to a maximum of
£1.25 million (inclusive of VAT) and any remaining balance of the Fidelity
Contribution will be credited to HET's rollover FAV. The Fidelity Contribution
is expected to fully offset the Company's direct transaction costs, such that
FEV shareholders are not expected to suffer any NAV dilution from the direct
costs of the Proposals.

Board composition

 

In accordance with the FEV Board's near-term succession planning, it is
expected that the Combined Entity's Board will have representation from the
current HET Board on completion of the Proposals.

 

Expected timetable

A circular to shareholders of the Company, providing further details of the
Proposals and convening a general meeting to approve the Proposals, and a
prospectus in respect of the issue of New FEV Shares in connection with the
Scheme, will be published by the Company as soon as practicable, with a view
to convening general meetings in early to mid-September 2025 and the Scheme
becoming effective by the end of September 2025.

As noted above, the Proposals will be subject to, amongst other things,
approval by the shareholders of both FEV and HET in addition to regulatory and
tax approvals. The expected timetable in respect of the Proposals remains
subject to change and, in particular, may be impacted by the treatment of the
HET Loan Notes under the Scheme.

The Chairman of FEV, Davina Walter, commented:

"The Board of Fidelity European Trust PLC believes this is an exciting
opportunity, with compelling benefits for both sets of shareholders, to create
the `go to trust' for investing in Europe. The proposals will result in the
Company being well positioned to continue to deliver attractive returns, with
new and existing shareholders benefitting from a reduced management fee and a
lower ongoing costs ratio."

"I would like to thank Fidelity for its commitment to the proposals and look
forward to working closely with the board of Henderson European Trust plc to
deliver an outcome that is in the best interests of both existing and future
shareholders."

 For further information please contact:                                      
 FIL Investment Services (UK) Limited                   +44 (0)800 700 000    
 Claire Dwyer Daniel Summerland Dominic Newman                                
 Dickson Minto Advisers LLP (Financial Adviser to FEV)  +44 (0) 20 7649 6823  
 Douglas Armstrong Andrew Clark Jamie Seedhouse                               

Notes:

(1)        Based on a combination of the Company and HET as at 17 June
2025 (with net assets of approximately £1.7 billion and £640 million
respectively), current cost estimates and assuming (i) there are no dissenting
HET shareholders and (ii) 33.3 per cent. of HET shares are validly elected for
the Cash Option (such that the Cash Option is fully subscribed). Figures
exclude any impact of HET portfolio realisation costs in connection with the
Proposals and acquisition costs (including any commissions, taxes (including
stamp duty or equivalent), transaction charges and/or market charges)
associated with the transfer of assets from HET to FEV. All figures are
illustrative only, using currently available information and estimates, and
are subject to change.

(2)        The Company currently pays an annual management fee of 0.85
per cent. of net assets up to £400 million and 0.65 per cent. of net assets
in excess of £400 million.

(3)        The Company's last published OCR (as at 31 December 2024)
was 0.76 per cent. Based on, inter alia, the assumptions in Note (1) above,
the illustrative OCR of the Combined Entity on completion of the Proposals is
currently expected to be 0.68 per cent. (without making any adjustment to the
calculation of the annual amount payable under the Revised Fee Arrangements to
account for the Fidelity Cost Contribution given that this is a non-recurring
item).

Important Information

This announcement contains information that is inside information for the
purposes of Article 7 of the UK version of Regulation (EU) No. 596/2014 which
is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as
amended. Following publication of this announcement, this inside information
is now considered to be in the public domain. The person responsible for
arranging for the release of this announcement on behalf of the Company is FIL
Investments International acting as company secretary.

The securities referred to herein have not been, and will not be, registered
under the U.S. Securities Act of 1933, as amended, and may not be offered or
sold in the United States, except pursuant to an applicable exemption from
registration. No public offering of securities is being made in the United
States.

The Company's Legal Entity Identifier is 549300UC0QPP7Y0W8056.



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