Alliance Trust strikes back in shareholder battle

The fund woos shareholders away from activist investors Elliott with strong returns and a search for a 'truly independent' non-executive director.

by Adam Gale
Last Updated: 23 Jul 2015

Alliance Trust has used its strong quarterly results to reassure shareholders, as activist investor Elliot Advisors tries to convince them to overhaul the board. The fund announced total returns to investors were up 6.9% on last year for the three months to 31 March, gently reminding shareholders that this was well ahead of the sector median. Nothing so likely to arouse the passions of investors than a good median, eh?

‘We have created and protected investor wealth for generations and have delivered an unbroken and almost unequalled track record of increasing dividends for the past 48 years,’ the firm said, pointing out that the share price reached its all time high of 523p over the period. It’s now up to 527p.

This will surely help the board in its power struggle with its largest investor, Elliott Advisors, which wants to bring three new non-execs onto the board in response to the firm’s 'persistent underperformance'.

The management, led by chair Karin Forseke and chief executive Katherine Garrett-Cox, launched a furious counteroffensive a few weeks back that had Elliott accusing it of ‘personal attacks in a manner unbecoming of directors of a public company‘. Nothing, however, speaks quite so loudly to investors as returns.

In an effort to parry Elliott’s proposals for new NEDs, Alliance also announced it’s looking for its own ‘new, truly independent non-executive director’ in the summer, and has appointed Russell Reynolds to conduct a ‘broad, transparent and rigorous search’. It even offered to consider Elliott’s choices, saying ‘any candidates put forward by our shareholders will be considered’.

Shareholders and spat-enthusiasts will await Elliott’s response.

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