Alliance Trust and Elliott reach agreement at eleventh hour

Alliance_Trust_NewAfter weeks of claim and counter-claim, in what had become an increasingly hostile stand-off, the board of Alliance Trust has today sensationally announced an agreement with activist shareholder Elliott Advisors.

Peace broke out on the eve of what was billed as tomorrow’s crunch AGM showdown after Alliance Trust said it has agreed to appoint two of the three directors proposed by Elliott, Anthony Brooke and Rory Macnamara, to the board after consulting other shareholders.

Over the weekend, it emerged that Aberdeen Asset Management and Legal & General had both indicated they would back Elliott’s attempt to have a trio of new directors installed at the meeting in Dundee.

Aberdeen, headed by chief executive Martin Gilbert, has previously been linked with a bid to run the trust, and owns 1.5 per cent of the fund, while Legal & General has a 2.5 per cent stake.

According to a statement issued this morning, Elliott Advisors, which holds a 12 per cent stake in the Trust and has been highly critical of what it has described as the under-performance of the 127 year-old wealth manager, has now “agreed to withdraw its three resolutions from the Alliance Trust Annual General Meeting on 29 April 2015 and has committed to support the Board and management on all other resolutions”.

Katherine Garret-Cox
Katherine Garret-Cox

Elliott’s agitating has been vigorously resisted for weeks by the current board led by chief executive Katherine Garratt-Cox who has questioned the independence of the prospective directors and condemned Elliott’s intentions as the product of shortsighted self-interest.

However, the increasingly hostile exchanges also appear have been addressed ahead the AGM, with the Board and Elliott also agreeing on “certain mutual non-disparagement undertakings” and, in what would seem to be an effort to draw a line under the episode, Elliott has agreed to “not call a general meeting or seek to agitate against the Company, its Board or management publicly until after the Company’s 2016 AGM at the earliest”.

Alliance Trust said Mr Brooke and Mr Macnamara will join its board once customary regulatory approvals have been obtained and that they will act as board observers in the interim period.

The Board also restated its previously announced plan to accelerate the process of appointing an additional independent non-executive director, which it said would be done in consultation with the Company’s major shareholders.

Alliance Trust chair Karin Forseke, said: “On behalf of the whole Board, I would like to express my gratitude to our shareholders for engaging with us on this important issue. Having considered this feedback we have worked with Elliott to find a compromise which we believe is in the best interests of all our shareholders.

“I would also like to welcome Anthony and Rory to the Board where their significant experience will be a considerable asset.”

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