In statement to the stock exchange Alliance Trust said it had rejected the American activist hedge fund’s proposal for Anthony Brooke, Peter Chambers and Rory Macnamara to join the board as it did not consider them independent. The three men put forward were chosen via a selection process instructed by Elliott.
Alliance Trust’s management have claimed Elliott’s interests are ‘at odds with other shareholders’ and that it intends to pursue a short-term agenda aimed at facilitating an exit.
According to Alliance Trust Elliott has repeatedly proposed that a tender offer for 40% of its outstanding shares at a narrow discount be launched, which would require ‘significant liquidation of the company’s assets.’
Such a move could threaten the existence of the company and would ‘ride roughshod’ over long-term shareholders, customers and employees, the Alliance Trust board claimed.
This is unlikely to be the end of the story however.
Elliott first declared it was a shareholder in the company in March 2011. The firm has a long track record of shareholder activism with an established strategy of buying large stakes in listed companies then using this to exert control over the business, further its own interests and ultimately engineer a profitable exit.
“Elliott’s proposed resolutions are completely unacceptable,” said Alliance Trust’s 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. We do not consider their proposed directors to be independent and believe that Alliance Trust’s current Board is diverse, dynamic and more than fit for purpose.
“Alliance Trust continues to generate strong returns for all of its shareholders, said Katherine Garrett-Cox, Alliance Trust’s chief executive. “The company is performing well and we believe our strategy of responsible investment is creating long term value for our shareholders,” she added.
