Alliance and Elliott trade blows in war of words

Katherine Garrett-Cox is Alliance's chief executive. Picture: Jane Barlow
Katherine Garrett-Cox is Alliance's chief executive. Picture: Jane Barlow
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The battle lines between Alliance Trust and the activist investor trying to shake up its board hardened yesterday as the company warned that Elliott Advisors’ plan “threatens its very existence”.

The Dundee-based investment manager hit out at its biggest shareholder, accusing it of short-termism and urging thousands of retail shareholders to vote down Elliott’s nominees at the forthcoming annual meeting.

In a response to Elliott’s public call for three new non-executive directors which it has lined up to join the board, Alliance – led by chief executive Katherine Garrett-Cox – said: “Elliott’s interests are at odds with our other shareholders.”

It said that, based on previous interaction with the US hedge fund, management considers that Elliott would use its board influence to “pursue a short-term agenda aimed at facilitating an exit from its shareholding in the company”.

“Given the size of its position, this would involve disruptive actions which are not in the long-term interests of our shareholders,” it added. “For instance, Elliott has repeatedly proposed that Alliance Trust should launch a tender offer for 40 per cent of its outstanding shares at a very narrow discount, which would require a significant liquidation of the company’s assets. The board considers that this type of action potentially threatens the very existence of the company, and rides roughshod over our long-term shareholders, our customers and our over 250 employees.”

Elliott, an activist investor that has famously taken on the Argentinian government over bond repayments, denies it wants to exert influence over particular policies and instead says that “fresh blood” on the board would help improve the performance of Alliance’s funds.

Responding to Alliance’s rebuttal, it said: “We believe that this decision is indicative of a board that is out of touch with the concerns of its shareholders, and which needs fresh perspectives.”

The group described itself as a long-term shareholder and said its public campaign follows months of attempts to engage privately with management.