Asia Dragon shares surge on Ashoka merger proposal

Shares in the Abrdn-run Asia Dragon Trust spiked on Tuesday after the £35m Ashoka Whiteoak Emerging Markets made a merger approach for its much larger rival.

Ashoka said it had put forward a proposal to merge the two trusts, with the option of a cash exit of up to 50% for Asia Dragon shareholders, who saw their investment jump by 7% in London Stock Exchange trade.

"The board of AWEM believes that the proposed transaction should deliver AWEM shareholders a vehicle of materially enlarged scale, with improved secondary market liquidity and a reduced ongoing charges ratio," Ashoka said in a stock exchange filing.

It added the deal would give Asia Dragon shareholders "significant uplift in the market value" of their investment "due to the superior rating at which AWEM's shares are trading and have historically traded compared with Asia Dragon's shares over the recent past".

Ashoka chair Martin Shenfield said the offer had the support of 56% of his trusts' investors but "sadly, we have not received any meaningful engagement with the board of Asia Dragon".

In response, Asia Dragon confirmed the approach, but urged shareholders "to take no action at this time in relation to the AWEM proposals".

Reporting by Frank Prenesti for Sharecast.com