Elliott Management looks set to sell stake in Alliance Trust

After a stormy six-year relationship, Alliance Trust may finally be able to free itself today of aggressive activist shareholder, Elliott Management, after a shareholder meeting.

During Elliott’s involvement with Alliance Trust, which included building up an almost 20% stake in the firm, tensions spilled over resulting in the departure of Catherine Garrett-Cox last year. 

This followed a fiercely fought campaign by Elliott to have two independent directors put on the board of Alliance Trust, which the US hedge fund had accused of poor performance and high costs.

Last month Alliance Trust announced that it had agreed to buy out Elliott in five instalments amounting to £620 million (€728 million), which Elliott is thought to be keen on as the price is 5% below Alliance Trust’s net asset value, which is at its best level in five years.

UK private investors’ association ShareSoc is in favour of the plan. It said in a note to members: “The repurchase of the Elliott shares will avoid future pressure from them and the purchase appears to be at a fair price and does not favour them over other investors who can currently sell shares in the market at a similar price and will continue to be able to do so.”

However, not all shareholder groups were keen on the proposal. US-based Institutional Shareholder Services (ISS), said in a note that shareholders should reject the proposal “due to favourable treatment of the company’s largest shareholder… whilst others are not presented with a similar exit opportunity”.

©2017 funds europe

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