Edinburgh Worldwide (EWI) has conceded defeat in its battle with Saba Capital saying the activist hedge fund has won the support of another US fund to take its base to over 40% of the shares, meaning its three nominees to the board will be elected at the annual general meeting (AGM) today.
Subject to confirmation at the midday AGM held at fund manager Baillie Gifford’s office in Edinburgh, chair Jonathan Simpson-Dent and fellow non-executive directors Mary Gunn, Jane McCracken, Caroline Roxburgh, Gregory Eckersley and Mungo Wilson will be replaced by Saba candidates Gabriel Gliksberg, Jassen Trenkow and Michael Joseph.
Saba, the largest shareholder with a 31% stake, had already won the support of two shareholders, believed to be US hedge funds. The addition of another US fund with a “material holding” voting in favour of Saba’s resolutions had pushed their collective holdings to over 40%, which would have required a massive shareholder turnout of over 80% to defeat.
Unfortunately, for the EWI board which had sought to rally shareholders to its cause, selling by previously supportive private investors and wealth managers, who did not want to get stuck in a Saba-controlled fund, has tipped the balance against the company.
Saba, which wants to replace Baillie Gifford as fund manager, this month said it would want the new board to hold an immediate tender offer to allow shareholders to exit at net asset value minus costs. It said there should be a second tender offer if SpaceX, the trust’s largest holding at 20.4% of assets, floated on the US stock market this summer.
“This is a disappointing day for our long-standing shareholders who are set to lose exposure to this exciting mandate focused on next-generation technology, seemingly in favour of Saba’s plan to invest in other UK investment trusts,” said EWI chair Jonathan Simpson-Dent.
Our view
James Carthew, head of investment company research at QuotedData, said: “As anticipated, Saba has achieved its aim of seizing control of Edinburgh Worldwide. It is curious that it did so with the aid of three other US investment funds. We do not know who they are because no disclosures have been made (they are likely below the threshold for that) but it would be fascinating to know what they think is the benefit of buying EWI very close to asset value and handing it over to Saba’s nominees. They could have captured any possible upside from SpaceX without changing the board. If Saba asked them for help, they would have constituted a concert party and be forced to bid for the company – so surely that could not have happened. As with Impax Environmental, many eyes are now focused on the actions of this new board. Any suspicion that they are not acting in all shareholders’ best interests should be flagged to the FCA.”
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