REG - Shires Income PLC - Recommended combination of AEI and SHRS

Shires IncomeAnnouncement

08/01/2026 07:00

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RNS Number : 0738O  Shires Income PLC  08 January 2026

SHIRES INCOME PLC

Legal Entity Identifier (LEI): 549300HVCIHNQNZAYA89

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE NOT FOR RELEASE,
PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN
OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THE
REPUBLIC OF SOUTH AFRICA, IN ANY MEMBER STATE OF THE EEA OR IN 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 any 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.

This announcement contains inside information.

 8 January 2026

Aberdeen Equity Income Trust plc and Shires Income PLC

Recommended Combination of Aberdeen Equity Income Trust plc with Shires
Income PLC

Introduction

The Boards of Aberdeen Equity Income Trust plc ("AEI") and Shires Income PLC
("SHRS)") are pleased to announce that heads of terms have been agreed for a
combination of AEI and SHRS (the "Combination"), bringing together two
successful investment trusts to create a larger and stronger company for
shareholders.

The Combination will be implemented through a scheme of reconstruction of SHRS
under Section 110 of the Insolvency Act 1986 (the "Scheme"), under which SHRS
shareholders will be entitled to receive new AEI shares or to elect some or
all of their shares for cash. The enlarged AEI will be the ongoing company
(the "enlarged Company").

abrdn Fund Managers Limited ("Aberdeen") will continue to manage the enlarged
Company. Conditional on the Combination being implemented AEI will submit an
updated investment objective and policy for its shareholders to approve. The
updated investment policy will incorporate SHRS' ability to invest in
investment- grade fixed income and preference shares as well as having
selective exposure to overseas equity in developed markets.

Benefits of the Combination

The Boards believe that the Combination will bring together two investment
trusts with broadly similar investment objectives, good performance records
and share price ratings, using the same portfolio management team. It will
create a larger, more liquid, and more cost-effective company, which should
deliver greater value for all shareholders. Specifically:

·      Strong records of investment performance:

For periods to 31 December 2025:

o  Both companies have delivered strong investment returns. AEI has delivered
a net asset value total return of 29.9.%, 41.2% and 63.0% over the past one,
three and five years respectively; SHRS has delivered a net asset value total
return of 24.8%, 42.6% and 59.2% over the same periods(1).

o  Both companies pay dividends above the average yield of the UK income
sector and have grown their dividends, whilst delivering attractive total
returns (i.e. including capital growth).

o  The Combination should provide an opportunity to enhance the strong
investment returns using the benefits of increased scale and reduced operating
costs.

·      Increased scale: It is expected that the Combination will deliver
a significant increase in the size of AEI to form an enlarged company of
between £289 and £320 million, depending on the take up of the cash exit
offered by SHRS to its shareholders, based on combined net assets as at 31
December 2025. With greater scale, the enlarged Company is expected to appeal
to a broader range of investors, which in turn should result in higher trading
volumes and improved market liquidity in the enlarged Company's shares.

·      Differentiated proposition: Subject to the approval of changes to
AEI's investment objective and policy, the enlarged Company will retain SHRS'
distinctive portfolio features, including some exposure to investment-grade
fixed income securities and preference shares, as well as selective exposure
to overseas equities in developed markets. This approach aims to provide
shareholders with greater diversification, continued progressive dividend
growth and a differentiated option within the AIC's UK Equity Income Sector.

·      Reduced costs: It is expected that the Combination will deliver a
reduction in the ongoing charges ratio ("OCR") for shareholders in the
enlarged Company through its increased scale and absorption of fixed costs
over a larger asset base. The enlarged Company will retain AEI's current
management fee of 0.55% per annum of net asset value, together with an
additional fixed fee of £120,000 (linked to CPI). The manager's fees will be
scaled back, if required, so that the OCR does not exceed 0.78%, compared to
AEI's current OCR of 0.84% and SHRS' of 1.00%.

·      Sustained and growing income: There should be no reduction in
dividend income for shareholders in either AEI or SHRS. The enlarged Company
will continue AEI's commitment to a progressive dividend policy, aiming for a
dividend increase each year. For the current year, ending 30 September 2026,
AEI is expected to pay not less than 23.1p per share in aggregate, paid
quarterly. The Board of the enlarged Company will look to maintain the
enlarged Company's AIC Dividend Hero status and extend its track record to 26
consecutive years of dividend growth. AEI has both revenue reserves and
realised capital reserves to support the payment of dividends, if required.

·      Share rating: AEI shares have enjoyed a strong market rating in
recent years, with an average discount to net asset value of 0.2% and 1.8%
over the past one and three years respectively. SHRS has traded at an average
discount to net asset value of 5.2% and 7.1% over the same period and both
companies' shares were trading at premiums of 0.7% and 0.9% respectively at 31
December 2025.

·      Cost contributions: To ensure maximum value for continuing
shareholders, Aberdeen has agreed to cover all direct transaction costs
(excluding portfolio trading and stamp duty), in excess of any contribution to
scheme costs arising from the SHRS cash exit option at a 2% discount to
formula asset value. Aberdeen's cost contribution may be made in whole or in
part through an offset against future management fees minimising the impact on
net asset value for both AEI and SHRS shareholders.

 

·      Tax-efficient rollover: UK SHRS shareholders will be able to roll
their investment into AEI without triggering a capital gains charge, subject
to current customary HMRC tax clearances being received. The partial cash exit
is being provided by SHRS for its shareholders who might wish to exit some or
all of their shares. The main objective of the transaction is to achieve a
combination of the two companies and the benefits of scale and cost reduction
that brings.

 

·      A pre-liquidation dividend of 10.0 pence per share is expected to
be paid by SHRS following the passing of the SHRS resolutions at the first
general meeting to approve the Combination.

The Boards of both companies, together with Aberdeen, believe the recommended
Combination represents an opportunity to create a larger, differentiated UK
Equity Income investment company, using the same management team, whilst
delivering a progressive dividend growth strategy, lower costs, and enhanced
growth prospects for all shareholders.

The Board of AEI has received independent financial advice from J.P. Morgan
Securities plc (which conducts its UK investment banking business as J.P.
Morgan Cazenove).

The Board of SHRS has received independent financial advice from Winterflood
Securities Limited as to the terms of the Combination and that the terms of
the Combination are fair and reasonable and are in the best interests of
shareholders as a whole.

The Scheme:

The Scheme will be effected by way of a scheme of reconstruction of SHRS under
section 110 of the Insolvency Act 1986, resulting in the voluntary liquidation
of SHRS and the transfer of certain of SHRS' assets to AEI in consideration
for the issue of new ordinary shares of AEI ("New AEI Shares") to
shareholders who roll over into AEI. The number of New AEI Shares issued to
shareholders will be determined by the ratio of the AEI formula asset value
("FAV") to the SHRS rollover FAV.  Detailed information on the Scheme, the
FAVs and the features of AEI after the scheme will be provided in the
circulars sent to shareholders to approve the Scheme in February 2026.

The Scheme will be subject to, inter alia, the approval of both AEI's
and SHRS' shareholders, in addition to tax clearances and regulatory
approvals. Subject to, and conditional on, the Scheme becoming unconditional,
qualifying SHRS shareholders will be entitled to receive in respect of some,
or all, of their SHRS shares:

i.   New AEI Shares and/or

ii.   Cash (the "Cash Option"). The Cash Option will be for up to a maximum
of 25% of SHRS' issued ordinary share capital (excluding treasury shares),
with all valid elections accepted. Excess elections can be made and will be
satisfied to the extent that other shareholders choose not to elect for cash.

New AEI Shares will be issued under the Scheme to the extent that SHRS
shareholders do not make a valid election for the Cash Option in respect of
some or all of their shares or to the extent that their elections for the Cash
Option are scaled back. The Cash Option will be offered at a discount of 2 per
cent. to the SHRS FAV per share. In accordance with customary practice for
such transactions involving investment trusts, the City Code on Takeovers and
Mergers is not expected to apply to the Scheme.

The Cost Contributions

Transaction costs (excluding portfolio trading and stamp duty) will be covered
for continuing investors by Aberdeen via an offset against future management
fees, less the contribution resulting from the take-up by SHRS shareholders of
the Cash Option at a discount of 2% to the SHRS FAV per share.

It is, therefore, expected that there will be no net asset value dilution for
either AEI shareholders or SHRS shareholders who roll over into the enlarged
Company.

Board structure

Following completion of the Scheme, it is expected that Simon White, one of
the Non-Executive Directors of SHRS, will join the Board of the enlarged
Company. All of SHRS' directors support the proposed combination, and the
remaining three SHRS directors will be standing down to help to ensure
implementation of the Scheme and to ensure that the costs of the enlarged
Company are contained.

Expected timetable

It is intended that the documentation in connection with the Scheme will be
posted to each of AEI's and SHRS' shareholders in February 2026 with a view
to convening general meetings thereafter. The Scheme is expected to become
effective before the end of Q1 2026.

Sarika Patel, Chair of Aberdeen Equity Income Trust plc, said:

" The Board of Aberdeen Equity Income Trust plc is very pleased to announce
the recommended combination with Shires Income PLC, which we believe creates a
compelling opportunity for the shareholders of both companies. Bringing
together two high-quality investment trusts with aligned objectives, a shared
management team and complementary portfolios, the enlarged Company will
benefit from greater scale, improved liquidity and lower costs. The Board
considers that this is a rare proposal in the investment trust sector since
the Scheme will be undertaken from a position of strength, where both
companies are performing strongly and have share prices which are either
trading at, or very close to, a premium to their underlying NAVs. This
transaction strengthens our ability to deliver a progressive dividend policy
and attractive long-term returns and represents a clear vote of confidence in
the enduring strengths of the investment trust structure."

Robin Archibald, Chair of Shires Income PLC, said:

" By combining two successful UK equity income investment companies in the
same management stable, the enlarged Company can offer significant benefits of
scale and economies for both sets of shareholders with a competitive
investment proposition for above average UK equity income. This is a
constructive initiative designed to enhance and, most importantly, to try to
encourage new investors to support a closed-ended investment company that can
provide returns not available from open-ended alternatives by using the
benefits of the closed-ended structure, including gearing, allocation of costs
and use of reserves."

 

Enquiries:

 abrdn Fund Managers Limited

 Ben Heatley (Head of Closed End Fund Sales)
                 +44 (0) 207 156 2382

Notes

1 Source: LSEG Datastream. Past performance is not a guide to future results.

Performance data sourced from LSEG Datastream as at 31 December 2025.

Important Information

This announcement contains inside information. The entity responsible for
arranging for the release of this announcement on behalf of AEI and SHRS is
abrdn Holdings Limited, as Company Secretary to both companies.

The information in this announcement is for background purposes only and does
not purport to be full or complete. No reliance may be placed for any purpose
on the information contained in this announcement or its accuracy or
completeness. The material contained in this announcement is given as at the
date of its publication (unless otherwise marked) and is subject to updating,
revision and amendment. In particular, any proposals referred to herein are
subject to revision and amendment.

The New AEI Shares have not been, and will not be, registered under the U.S.
Securities Act of 1933 (as amended) (the "Securities Act") or with any
securities regulatory authority of any state or other jurisdiction of the
United States, and may not be offered or sold in the United States or to, or
for the account or benefit of, U.S. persons absent registration or an
exemption from registration under the Securities Act. Moreover, the New AEI
Shares have not been, nor will they be, registered under the applicable
securities laws of Australia, Canada, Japan, New Zealand, the Republic of
South Africa, or any member state of the EEA (other than any member state of
the EEA where the shares are lawfully marketed). Further, AEI is not, and will
not be, registered under the US Investment Company Act of 1940, as amended.

Figures in this announcement that 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". All statements other than statements of
historical facts included in this announcement, including, without limitation,
those regarding AEI's or SHRS' respective financial positions, strategies,
plans, proposed acquisitions and objectives, are forward-looking statements.

Forward-looking statements are subject to risks and uncertainties and,
accordingly, AEI's or SHRS' actual future financial results and operational
performance may differ materially from the results and performance expressed
in, or implied by, the statements.

J.P. Morgan Securities plc (which conducts its UK investment banking
activities as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove") which is
authorised in the United Kingdom by the Prudential Regulatory Authority and
regulated by the Financial Conduct Authority and the Prudential Regulatory
Authority is acting exclusively for AEI and for no-one else in connection with
the Combination, will not regard any other person as its client in relation to
the Combination and will not be responsible to anyone other than AEI for
providing the protections afforded to its clients or for providing advice in
relation to the Combination, or any of the other matters referred to in this
announcement.  This does not exclude any responsibilities or liabilities of
J.P. Morgan Cazenove under the Financial Services and Markets Act 2000, as
amended, or the regulatory regime established thereunder.

Winterflood Securities Limited ("Winterflood") which is authorised in the
United Kingdom by the Financial Conduct Authority is acting exclusively for
SHRS and for no-one else in connection with the Combination, will not regard
any other person as its client in relation to the Combination and will not be
responsible to anyone other than SHRS for providing the protections afforded
to its clients or for providing advice in relation to the Combination, or any
of the other matters referred to in this announcement.  This does not exclude
any responsibilities or liabilities of Winterflood under the Financial
Services and Markets Act 2000, as amended, or the regulatory regime
established thereunder.

None of AEI, SHRS, Aberdeen, Winterflood or J.P. Morgan Cazenove, or any of
their respective affiliates, accepts any responsibility or liability
whatsoever for, or makes any representation or warranty, express or implied,
as to this announcement, including the truth, accuracy or completeness of the
information in this announcement (or whether any information has been omitted
from the announcement) or any other information relating to any of them,
whether written, oral or in a visual or electronic form, and howsoever
transmitted or made available or for any loss howsoever arising from any use
of the announcement or its contents or otherwise arising in connection
therewith. Each of AEI, SHRS, Aberdeen, Winterflood and J.P. Morgan Cazenove,
and their respective affiliates, accordingly, disclaim all and any liability
whether arising in tort, contract or otherwise which they might otherwise have
in respect of this announcement or its contents or otherwise arising in
connection therewith.

 

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