Alliance Trust has published a circular to its shareholders in response to activist investor Elliott Advisors, which is seeking to push through changes at the trust.
In the circular, the chairman of Alliance Trust’s board, Karin Forseke, said Elliott’s call for three new members to the board was “the thin end of the wedge and they [Elliott Adviors] would then pursue disruptive actions, to the detriment of other shareholders, focused on helping them to sell their shareholding quickly”.
The board of the trust also noted the three directors Elliott proposed, who were selected by a headhunter, could not be deemed independent.
Ms Forseke noted: “Elliott may seek to exert undue influence.”
She added if the members were elected it would allow Elliott “to pursue its own agenda and engineer a quick exit from its shareholding”.
Elliott, the US hedge fund group, which is now the biggest investor in Alliance Trust with a 12 per cent stake, attacked the trust over what it claims are high internal costs and its ongoing performance.
Its complaint will be discussed and a decision will be made at the annual general meeting of the trust in Dundee on April 29.
Elliott has now responded to the circular, contending it believed Alliance Trust would “benefit from a fresh perspective at its board”.
“Three new independent directors with impeccable credentials would help to address Alliance Trust’s persistent issues concerning poor performance, high costs, and weak corporate governance.
“We note that the company’s own February factsheet, published on its website today, shows that Alliance Trust’s total shareholder return has underperformed its global sector on a one-month, one-year, three-year and five-year basis.”
