RIT Capital, chaired by the British banker, says a combined company would be worth £5 billion. Alliance says it is now considering the approach as part of an ongoing review of the company.
RIT’s approach starts the clock on the 28-day period during which RIT must either make a formal offer or state it has no intention to bid.
Alliance, which manages about £2.7bn of assets, said RIT had not provided any detailed terms regarding the proposal.
Lord Smith (pictured), who took over as chairman from Karin Forseke, is continuing to review the business which has seen a number of senior level departures.
Chief executive Katherine Garrett-Cox left months after an acrimonious battle between the board and US hedge fund Elliott International.
RIT Capital was set up to manage the wealth of part of the Rothschild family and has assets worth around £2.4bn, while Alliance Trust has a market capitalisation of £2.62bn.
Alliance Trust issued a statement confirming the approach, noting changes to the composition of the board. It said:
“The board has recently appointed Canaccord Genuity, alongside other specialist advisers, to advise the company on continuing this process of development, to include a strategic review of the group encompassing a broad range of potential courses of action which the company might choose to take for the benefit of its shareholders.
“The company wishes to thoroughly explore all options available to it for the long-term future benefit of shareholders and therefore expects that the strategic review outcome may not be determined for some months.
“The board of Alliance Trust notes recent press speculation relating to an unsolicited approach received by the board and confirms that RIT Capital Partners has approached Alliance Trust with an informal proposal for a merger of the two companies.
“However, no detailed terms have been provided by RIT with regard to the proposal or in respect of the company’s two principal operating subsidiaries. The board of Alliance Trust will incorporate any formal merger proposal received from RIT into its strategic review, alongside the other options being considered.
“There can be no certainty that any transaction will result from the strategic review. In the interim, shareholders are strongly advised to take no action and to await the outcome of the board’s strategic review.”