Business Comment: Terry Murden

Garrett-Cox will struggle to heal Trust’s divisions

Katherine Garrett-Cox 4The battle for control of Scotland’s best known investment trust was supposed to culminate this week in a knife-edge vote over the composition of the board.

Instead, those still holding the reins at Alliance Trust capitulated to pressure from New York hedge fund Elliott Advisers and will allow two of the three nominees it wanted to elect as directors to take their place.

It means there will be no vote at the annual general meeting in Dundee – and no prospect of the board being seen to be defeated.

Except that this “compromise” really is a defeat. Somebody clearly got wind of the way the proxies were going and realised that Elliott was going to win.

Nor has the eleventh hour “truce” (the search for euphemisms seems somewhat unnecessary) saved anyone’s face, least of all that of chief executive Katherine Garrett-Cox whose future is far from safe.

She positioned herself firmly against the trio of nominees, saying she could not work with them. She claimed they were not truly independent, as Elliott had suggested.

The two sides have agreed a number of measures which include putting management of the Trust’s funds out to tender and spinning off various functions. For its part, Elliott has agreed to let things be and allow the board to get on with the day job.

But, given the hostility that has ensued in recent weeks, how can the board possibly work harmoniously and in the interests of shareholders, the biggest of which is Elliott itself which Mrs Garrett-Cox has fiercely opposed? Make no mistake, the aggression in the various exchanges made it clear that there is no love lost between them.

Mrs Garrett-Cox has divided shareholders and with some big hitters throwing their weight behind Elliott she has her work cut out if she is to unite them.

It might just be time to spend a little more time with the family.



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