A merger (or scheme that fuses two issuers) is mandatory once it is approved: both sets of shareholders end up in the combined vehicle, usually for paper. A takeover is a bid for control of a target that remains a separate legal entity until it is squeezed out; holders can accept or refuse until the offer is driven through. Confusing the two mis-sets the election workflow.
A demerger or spin-off distributes a subsidiary as a new listed line. The original book cost is not left on the parent: it is split between the two resulting holdings in proportion to their first-day market values.
Atlantic Horizon UCITS ICAV meets both shapes in one book. Thames Industrial plc can demerge a logistics subsidiary onto a new CREST line; Nippon Industrials KK can be absorbed in a Tokyo statutory merger and disappear as JP3899200005. One event credits a second holding. The other retires a holding. Neither is a City Code bid, and neither waits for an MT565 if the scheme is truly mandatory.
Book cost is the quiet failure. On the Thames Industrial demerger, Dublin has to apportion the ICAV’s historic cost between parent and spin-off on day-one market values. Leave the whole cost on the parent and the new line opens at zero — a future gain the fund did not earn. State Street will credit the new ISIN either way. NAV still needs the split cost before dealing.
The Irish administrator cannot outsource that apportionment. Final NAV release stays in Dublin, and the ICAV’s own shareholder register stays in Dublin. A merger in Tokyo or a spin-off in London rewrites the portfolio, not the fund register. Custody confirms what landed. Dublin still has to say what it cost and what it is worth.
The Cayman sleeve of the same house takes the same market event. It may mark the new line faster or slower. It does not get a different first-day ratio. If the two books apportion Thames Industrial 80/20 in one sleeve and 70/30 in the other, the house has two cost bases on one spin-off, and one of them is going to be wrong at sale.
Open trades tell the workflow apart. Mandatory mergers transform in CREST and in JASDEC. A takeover acceptance does not: it is an election, and TTE escrow is a different process. Booking a bid as if it were a merger will skip the instruction that actually moves the stock.