Alliance Trust investors clash over proposed buyback
Investment fund Alliance Trust is convening a general meeting for shareholders this Tuesday to approve its plan for a £620m buyback deal with Elliott Management, the activist investor.
It proposes that the buyback will take place in five tranches to enable the American hedge fund to cash in its investment.
UK private investors’ association ShareSoc has come out in favour of the proposal.
ShareSoc, which represent the needs of individual investors rather than institutions, 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.”
“The Alliance Trust Shareholder Action Group which has been supported by ShareSoc is satisfied that the new Board of Directors has made good progress in revitalising the Trust since it was appointed.”
“The board structure and corporate governance of the company have been changed and are now in a more conventional form for investment trusts.”
An Alliance Trust spokesperson said, “The Board believes that the proposed repurchase is fair and reasonable, and in the best interests of shareholders as a whole. At present, any shareholder other than Elliott is able to take part in the buyback programme. If the proposal is voted down, the only shareholder who will not be on an equal footing to others will be Elliott.”
But US based Institutional Shareholder Services (ISS), said 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”.
ISS pointed out that Elliott could sell its shareholding at the least discount to Alliance Trust’s net value in five years.