Elliott Takes Akzo Nobel to Court to Oust Chairman in PPG Bid Battle
May 09 2017 - 4:48AM
Dow Jones News
By Ben Dummett
U.S. activist investor Elliott Management Corp. has asked a
Dutch court to force Akzo Nobel NV to hold a special shareholder
meeting seeking the removal of its chairman, its latest attempt to
force the paint maker into sale talks with rival PPG Industries
Inc.
Elliott said Tuesday it filed a petition with the Dutch business
court, known as the Enterprise Chamber. It wants shareholders to
vote on Antony Burgmans' dismissal, arguing Akzo's supervisory
board chairman failed to "discharge his fiduciary and corporate
governance duties" after the Amsterdam-based company Monday
rejected PPG's latest, sweetened takeover offer of EUR24.6 billion
($27.1 billion) without first negotiating with the Pittsburgh-based
paint maker over a possible deal.
Declining the latest offer, Akzo argued its stand-alone strategy
to boost dividend payouts and spin off its specialty chemicals
business and return the bulk of the proceeds to shareholders would
generate better returns. Akzo said that decision was based on
"considerable in-depth analysis" and came after Akzo Chief
Executive Ton Büchner, and Mr. Burgmans met with PPG Chief
Executive Michael McGarry in Rotterdam, the Netherlands, on
Saturday.
But PPG said in a written statement that the meeting lasted less
than 90 minutes and that Messrs. Büchner and Burgmans "stated up
front that they did not have the intent nor the authority to
negotiate."
Akzo defended itself saying that it has acted "to the highest
standards of Dutch corporate governance" in considering each of
PPG's proposals. "We do not see how the dismissal of the
Supervisory Board Chairman is beneficial to the company, its
shareholders or stakeholders in anyway," the company said in a
statement.
Elliott is part of a group of several of Akzo's biggest
shareholders together holding more than 10% of the shares who
believe Akzo can't favor its stand-alone strategy over a takeover
without first negotiating with PPG to determine if it can get a
better deal for shareholders and other stakeholders through a
sale.
The lack of in-depth talks is an "arrogant dismissal of
recognized principles of proper corporate governance," Elliott said
in its statement Tuesday.
Elliott is appealing to the Dutch courts to require Akzo to hold
the special shareholder meeting on the dismissal of Mr. Burgmans
because Akzo, citing Dutch law, previously rejected the shareholder
request for such a meeting.
Still, Elliott's efforts could fall short even if Akzo is
required to hold the vote. That is because it is unclear if PPG
will continue its pursuit. On Monday, PPG said that it is reviewing
Akzo's latest rejection. But PPG previously said that it doesn't
plan to raise its offer again suggesting the paint maker may have
to take the riskier approach of launching a hostile bid.
Akzo's corporate structure could also make it difficult for
either PPG or Elliott to appoint new directors. Akzo has a
controlling foundation and its four directors, including Mr.
Burgmans, Akzo's chairman, retain the exclusive rights to nominate
replacement directors. Supporters of such a structure say it
protects stakeholders in the company other than investors--for
instance, workers.
Still some observers say PPG could still prevail if it pursues a
hostile bid. A commitment to proceed with a tender offer could
provide enough pressure for those board members to wave the white
flag. Should they hold out, however, and PPG wins over shareholders
in a tender offer, pressure would only mount.
Write to Ben Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
May 09, 2017 05:33 ET (09:33 GMT)
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