Alliance Trust gets a year to show results as Elliott Advisors gives 12 months' notice

Tim Wallace
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Garrett-Cox joined Alliance in 2008
Investment firm Alliance Trust has been put on 12-months’ notice by activist investor Elliott Advisors to show results or be forced to change its strategy.
In a vicious battle over the past month, both sides have been rallying support among shareholders, with Elliott pushing for three new directors to join the board, and Alliance arguing it is already on the right track.
Elliott had argued that results have been poor at the firm, claiming executives have not been sufficiently challenged by the board.
But in a shock compromise on the eve of the annual general meeting, Alliance Trust accepted two of Elliott’s chosen directors, and will appoint a third independent non-executive soon.
In return, Elliott has agreed to give Alliance Trust another year to show its strategy is working. But after that, the gloves will come off if performance has not improved sufficiently.
“The board and Elliott have agreed on certain mutual non-disparagement undertakings and that Elliott will not call a general meeting or seek to agitate against the company, its board or management publicly until after the company’s 2016 annual general meeting at the earliest,” the FTSE 250 investment firm announced.
Alliance’s share price rose in early trading, but ended the day flat.
Analysts at Numis, a firm which also worked on the case for Elliott, said in a note that the row could flare up again next year depending on results.
“This is unlikely to be the end of the story. There remains significant pressure on the managers and board to turn around investor sentiment towards the stock,” Numis said. “While Elliott is likely to have a low profile over the next year, it will still be able to add to its stake (currently 12.2 per cent) if the discount remains wide.”
A series of major shareholder groups and proxy organisations had backed Elliott’s plan, although as 70 per cent of shareholders are small investors, the result would not have been absolutely certain until the AGM.
One participant, who asked not to be named, welcomed the resolution of the argument. “The agreement is indicative of significant support for new blood on the board,” he said.
That indicates support for change will remain if results do not improve soon.


■ Elliott gains two seats on the board of Alliance Investment Trust. It had sought three.
■ Early this year it succeeded in pushing through a takeover offer for restaurants group Prezzo from US private equity group TPG, despite the bid being seen by some as undervaluing the company. Elliott held a 14 per cent stake.
■ Last year it built a stake in supermarket group Morrisons but failed to achieve a radical overhaul of its property portfolio to boost returns.
■ In 2011 it was unsuccessful in overthrowing the board of National Express, or forcing a sale or break-up to boost earnings but did succeed in gaining one board seat.
■ It also failed to remove board members from Actelion, Europe’s largest biotech company, and initiate an investigation into whether it had received takeover offers.


Non-executive director Hylands joined the board in 2008. He spent more than 28 years at Standard Life and was finance director there from 2001-2005. He chairs trustees of the Standard Life and BOC pension schemes.
Chairman Forseke became chairman in 2012 and is also on the boards of Wallenius Lines and the European Council on Foreign Relations. She was deputy chairman of the Financial Services Authority until 2012.
The non-executive director, who joined the board last year, advises international financial services groups. His background includes senior finance roles at Lloyds and at Ernst & Young, where he spent 23 years.
Kerr, who joined the board as non-executive director in 2012, also chairs the firm’s remuneration committee. He also sits on the boards of Fuller, Smith & Turner, Havelock Europa Fenwick and Arran Aromatics. Former executive roles were at The Body Shop, Kwik-Fit, Park Group, Virgin Retail Europe and Storehouse.
Chief financial officer Trotter joined the board in 2010, after previous roles at Legal and General, RBS, Standard Life and Ernst & Young.
Non-executive chairman Noble joined the board in 2012 and is chairman of its risk committee. After a career in investment, including roles at Goldman Sachs and The Pension Corporation, she is on the board of British Empire Securities and General Trust and Newton Investment Management and has roles at Mencap and the Hospice of St Francis, Berkhamsted.
The chief executive, who joined Alliance in 2008, has already survived attacks from Laxey Partners and Aberdeen Asset Management. Garrett-Cox, 47, has previously held executive roles at Morley Fund Management, the fund management division of Aviva, and Aberdeen Asset Management. She is a mother-of-four and has been awarded a CBE.


Industry veteran Brooke sits on the board of Bourne Park Capital and Quintessentially and has governance roles for Christ’s College, Cambridge and the National Portrait Gallery. His former board experience includes roles at Huntsworth, ComMedica and Merrill Lynch. Other roles included directorship positions at Fauchier Partners, Credit Suisse First Boston, BZW and SBC Warburg.
After an investment career taking in Price Waterhouse, Morgan Grenfell, Eurotunnel, Deutsche Morgan Grenfell and Lehman Brothers, Macnamara has held executive roles at firms including SportingBet, Carpathian and Mecom. His current appointments include executive roles at Dunedin Income Growth Investment Trust, Essenden, Mears Group and Augean.
Plus one more Alliance Trust nominee to come...

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