We love a good corporate spat here at MT, and it's rarely juicier than when shareholders and directors are at each other's throats. The board of investment fund Alliance Trust is in the middle of just such a tussle with its largest shareholder, Elliott Advisors.
Elliott, a US-owned hedge fund that controls 12% of Alliance, is asking shareholders to vote three new NEDs onto its 7-person board at its forthcoming AGM. It's unhappy with 'persistent underperformance' of Alliance's investment portfolio, the 'high and inflexible nature' of the firm's costs and losses by two of its subsidiaries, and believes City financiers Anthony Brooke, Peter Chambers and Rory Mcnamara can help fix the problems.
Alliance's management is not happy. 'Elliott's proposed resolutions are completely unacceptable,' said its chair Karin Forseke. 'The Board believes that they are a pre-cursor for further disruptive actions from Elliott which are likely to focus solely on engineering an exit from their shareholding and would not be in the interests of all of our shareholders. The Board is unanimous in strongly recommending that shareholders vote AGAINST all of the proposed resolutions'. We did not add the capitals.
Alliance takes issue with the independence of the proposed NEDs, claiming that Elliot instructed the search firm that found the three men and then nominated them. It also thinks that Elliott doesn't have the best interest of Alliance's many small investors in mind.
'Our investors care about the share price and they care about the dividends, both things that Elliott have made it clear they don't much care for,' boss Katherine Garrett-Cox told the FT. 'They think dividends are a waste of time, which most of our investors would find incredible.'
Elliott didn't take all this lying down of course. In time-honoured tradition, it issued its response to the stockmarket this morning. It denied that the proposed NEDs would not be independent, and said Alliance made 'factually incorrect assertions' about its intentions, which were 'erroneous and misleading'.
Elliott said it was a long-term shareholder (as opposed to being in it for short-term gain) and was 'surprised and disappointed' at Alliance's response. It even used its own capitals. 'We urge all shareholders to vote FOR the resolutions.'
The AGM takes place on April 29th in Dundee. Prepare for fireworks...