Alliance Trust Defends Chair's Share Purchase

By Mark Kleinman, City Editor

The chairman of Alliance Trust acquired thousands of shares in the company weeks after an activist shareholder had privately indicated that it was preparing to call for a boardroom shake-up.

Sky News can reveal that Karin Forseke, a former deputy chairman and senior independent director of the Financial Services Authority, bought the shares - worth approximately £25,000 - on 9 March, three days after Alliance Trust published its full-year results.

Ms Forseke's acquisition of the shares came roughly three weeks after Elliott Advisors had written to Alliance Trust's board on 19 February to signal that it was on the verge of being left with "no option other than to seriously consider bringing these issues [about management and performance] directly to other shareholders".

A meeting took place between Elliott representatives and Alliance Trust to discuss the results on March 12, at which people close to the FTSE-250 company said its shareholder did not raise the issue of requisitioning motions on which investors will vote at its annual meeting next month.

Elliott's decision to nominate a slate of directors was then made public on Sunday 15 March, the day after which Alliance Trust's shares closed up 2.7%.

Ms Forseke requested, and received, formal permission from colleagues for her 9 March share purchase, and there is no suggestion of impropriety on her part.

However, the implications of her share-buying activity, which is disclosed in public filings, may spark surprise in the City given Elliott's reputation as an aggressive activist for change at the companies it invests in.

One observer expressed surprise that directors had been given permission to trade in the shares given the contents of Elliott's letter to the board in February.

Elliott has been a shareholder in Alliance Trust since 2011.

In a statement issued to Sky News, a spokesperson for Alliance Trust said: "Alliance Trust was in a closed period from 31 December 2014 to the date of announcement of our results on 6 March 2015 so directors could not deal during that period.

"Karin requested permission to purchase an additional 4,895 shares through our normal share dealing procedures to add to her existing holding of Alliance Trust shares in her pension plan following the announcement of our results.

"She received that permission on 9 March and the purchase then took place on Wednesday 11 March before the meeting with Elliott and at a time when we had no knowledge that they intended to requisition the company.

"She currently has a holding of 107,227 shares. We encourage directors to hold shares in the company as a way of ensuring alignment of interests with other investors."

The battle between Elliott and Alliance Trust is shaping up to be one of the most fractious confrontations between a blue-chip UK company and an activist shareholder for some time.

Alliance Trust has raised doubts about the independence of the three directors nominated by Elliott and accused the hedge fund of behaving disruptively in order to facilitate an exit from its shareholding.

Elliott's other investments in Britain have included National Express, Game Digital and - briefly - the supermarket chains Wm Morrison and J Sainsbury.

Elliott declined to comment.

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