Milton Corporation Ltd (MLT) and Choiseul Investments Ltd (CHO) announced they had agreed on a merger plan estimated at $2 billion. The listed investment firms began their merger talks late last month, with Milton Corporation announcing that it had entered into merger implementation agreement with Choiseul.

Under the terms of the agreement, the merger between the two firms will be concluded via an arrangement that will see Milton Corporation shares issued to Choiseul Investment shareholders in exchange for their existing Choiseul shares. Currently, Milton Corporation controls an 11.9 per cent stake in Choiseul and has been its manager for 18 years now.

Shareholders of Choiseul Investment Ltd will vote on the agreed merger scheme in November and if successful, the two firms expect the merger to be implemented in December. The resultant entity from the merger will have about $2 billion worth of assets and more than 18,000 shareholders. Milton Corporation Ltd’s shareholders have been told the merger was likely to reduce the extent to which their shares trade at a discount to the company's net asset backing. It is also hoped that the merged entity will have additional cash reserves for future investments, said Milton. Milton shares added one cent to $15.65 and Choiseul shares gained two cents to $4.71.

Choiseul manages a portfolio of Australian equities, interest-bearing securities and cash. However, its portfolio is managed by Milton Corporation Limited and Choiseul aims to invest for the long term in well-managed companies that have a likelihood of paying increasing dividends. The firm’s portfolio is well diversified and its historical investment patterns indicate a conservative investment strategy aimed at providing medium- to long-term capital growth, said analysts.

On its part, Milton Corporation Ltd is a listed investment company that was incorporated in 1938 and listed in 1958. It is a long-term investor that invests in a diversified portfolio of companies, trusts, fixed-interest securities and real property. Its objective is to provide investors with a growing, fully franked dividend income stream over time and long-term capital appreciation.

Milton Corporation was incorporated as an investment company in November 1938, under the name Milton Investment Ltd. It listed on the then Sydney Stock Exchange in 1958 and adopted its current name in 1969. In July 1998 MLT merged with Chatham Inv. Co Ltd, Matine Ltd and Milkirk Investment Co Ltd.

7 Sep 2010.