US investor Saba Capital blocks merger of Baillie Gifford-managed trusts in London

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Dec 2 (Reuters) – U.S. activist investor Saba Capital has blocked a proposed merger of two London-listed Baillie Gifford-managed investment trusts, the firms said on Tuesday, in the latest tussle between Boaz Weinstein’s hedge fund and the pooled investment vehicles.

Baillie Gifford US Growth Trust and Edinburgh Worldwide Investment Trust (EWIT) said top shareholder Saba on Monday declined to support the proposed merger between the two trusts, derailing a deal that would have offered shareholders a cash exit of up to 40% and created a larger vehicle focused on U.S. companies under Baillie Gifford’s management.

Saba’s veto marks the latest flashpoint in its dispute with the boards of the two London-listed trusts, following failed takeover bids rejected by more than 98% of other investors.

The hedge fund holds 28% of Baillie Gifford US Growth Trust and 25% of EWIT, according to LSEG data.

Weinstein’s hedge fund, which targeted seven UK trusts earlier this year, accused the 160-year-old sector of underperformance – a claim the trusts reject.

They call Saba’s campaign self-serving, while Weinstein says he aims to improve returns by merging unpopular trusts, buybacks, and more investments in private assets.

Investment trusts are listed vehicles that individuals can buy shares in to gain exposure to assets, from listed stocks to hard-to-access private companies.

“We are highly disappointed that Saba has chosen once again to impede other shareholders by blocking the Board from credibly presenting a potential merger opportunity that would result in a materially improved position for shareholders of both companies,” said Tom Burnet, Chair of Baillie Gifford US Growth Trust.

Saba did not immediately respond to a Reuters request for comment. EWIT said it will continue talks with Saba to try to win support for the merger.

(Reporting by Yamini Kalia in Bengaluru; Editing by Rashmi Aich and Louise Heavens)