Templeton trust offers to buy back shares

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One of Britain’s biggest investment companies has reacted to demands from shareholders seeking an exit strategy by offering to repurchase up to 30 per cent of its shares.

The tender offer by Templeton Emerging Markets Investment Trust will be made at a discount to the £2.2bn trust’s net asset value, the rate of which will be decided at auction.

The company said the tender offer would provide a suitable exit for shareholders wishing to sell shares, while rewarding those who wanted to remain invested.

The move to offer a share buy-back follows previous aborted attempts to reconcile the differing desires of investors.

At the start of 2007 the trust’s largest shareholder, City of London, proposed a range of actions that it said would reduce the discount of Temit’s share price to its net asset value.

These measures, which included a share buy-back, were rejected by smaller shareholders concerned that a buy-back would result in an increase in expenses related to their holdings.

A second reconstruction plan was made last summer after a number of shareholders expressed a desire to redeem all or part of their holdings. The plan failed to win the 75 per cent majority required at an EGM, and a limited buy-back policy was implemented instead.

Shareholders who wish to dispose of or reduce their holdings will be able to do so once the offer is voted for at an extraordinary shareholder meeting.

The company requires approval from 50 per cent of those who vote to pass the tender offer.

It said it had the support of shareholders that represented almost a third of shares.

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