Alliance Trust says Laxey's latest attack on the investment trust is simply motivated by ‘its own short-term interest' amid reports Aberdeen Asset Management is looking to oust its chief Katherine Garrett-Cox (pictured).
According to a report in the Telegraph, Aberdeen is expected to contact the trust’s board with its proposals. The firm’s chief, Martin Gilbert, is reported to have said: ‘Aberdeen would love the opportunity, if the board ever did put it out to tender, to pitch for the trust.
'If we [Aberdeen] were given the opportunity, we would run Alliance with our other global portfolios out of our Edinburgh office.’
The news comes after Laxey, run by Colin Kingsnorth, requisitioned the £2.1 billion trust’s board with a fresh set of demands, including the consideration of outsourcing its fund management and a narrowing of the discount. The activist also wanted shareholders to be allowed to exit the trust closer to net asset value.
The move comes roughly a year after Alliance shareholders voted against Laxey’s proposals to introduce a strict share buyback policy on the trust.
Alliance Trust said there were five major flaws in Laxey’s latest attack. It claimed:
* Laxey's proposals will not benefit shareholders over the medium and long-term and are motivated by its own short-term self-interest
* The proposal to allow shareholders to exit the company at closer to net asset value is similar to that which shareholders convincingly rejected at last year's annual general meeting (AGM) and would have a similarly detrimental effect
* The board is already committed to narrowing the discount through improving investment performance, ongoing share buybacks and a continuing emphasis on sustainable dividend growth
* Externalising the investment management of the portfolio would negatively impact the company's ability to align the interests of its shareholders and investment managers
* Over the last year, Alliance Trust has delivered top quartile investment performance at bottom quartile cost, narrowed and greatly reduced the volatility of the discount and paid the largest annual dividend increase in 20 years
Alliance Trust chairman Karin Forseke said: ‘We are disappointed that Laxey has requisitioned the board again, having been convincingly defeated last year. This persistent requisitioning wastes shareholders' money and demonstrates Laxey's short-term attitude to its investment.
‘The board believes strongly that this resolution is not in the best interests of all shareholders. Alliance Trust remains focused on improving investment performance and last year delivered strong results, with total shareholder return in the top quartile. It is crucial that all shareholders make their voice heard and vote at our AGM on 27th April, and we strongly urge them to vote against Laxey's resolution.’