Akzo Nobel Strikes Agreement With Activist Investor Elliott After Dispute -- Update
August 16 2017 - 4:16AM
Dow Jones News
By Ben Dummett
Akzo Nobel NV reached a truce with Elliott Management Corp.
giving the activist investor board representation following a
monthslong standoff over Elliott's push to force the Dutch
chemicals company into talks over a $28 billion takeover bid.
In a joint statement Wednesday, the two sides said they reached
an agreement on Akzo's strategy to fully separate its
specialty-chemicals business, following a disagreement on whether
it would be sold or listed. The deal would "normalize the
relationship" between Akzo and its shareholders and suspend all
litigation for at least three months, they said.
Elliott will also support the appointment of Thierry Vanlancker,
who Akzo recently named as chief executive, to the board.
The deal follows a bitter dispute between Elliott and Akzo
following a protracted takeover attempt from U.S. rival PPG
Industries Inc. As one of Akzo's largest investors, Elliott mounted
a bold public-relations and legal campaign to try to force the
Amsterdam-based company into unwanted sale talks with PPG.
Akzo had argued that its plan to boost dividend payouts and spin
off its specialty-chemicals business would generate more value and
carry less risk than a sale. But the Elliott-led group said Akzo
couldn't make that decision until it first tried to negotiate a
deal with PPG.
Elliott argued that shareholders had lost confidence in Akzo's
leadership after it rejected calls from Elliott and several other
large shareholders for the company to hold a vote on entering into
sale talks.
Still Akzo's signal Wednesday that it plans to sell its
chemicals business outright addresses investor opposition to an
initial public offering.
Some investors have argued against an IPO of Akzo's
specialty-chemicals business because such a move would make it
harder for a future bidder to digest the company if it also owned a
significant stake in the publicly traded chemicals company.
Akzo's stock price would more likely trade at a discount to its
pure paint-making peers as a result of an initial public offering
because of the added difficulty in valuing Akzo because of its
continued ownership in the chemicals business, some investors
said.
Akzo also announced two new nominations to its supervisory
board, backed by Elliott. Akzo said it intends to nominate a third
supervisory board member, in consultation with major shareholders
including Elliott.
Elliott is widely known for its brash tactics in activist
campaigns against target companies. In recent months it has also
campaigned for mining giant BHP Billiton Ltd. to exit its U.S.
onshore oil-and-gas assets and collapse its dual-listed
structure.
"I am pleased our recent constructive discussions with Elliott
improved understanding between both parties," Akzo Chairman Antony
Burgmans said in Wednesday's statement.
Last week, Elliott lost a legal challenge to remove Mr.
Burgmans.
"Today's agreement marks an important next step in positioning
Akzo Nobel for success and enabling the company to deliver
compelling value to all its stakeholders," said Elliott CEO Gordon
Singer.
Rory Gallivan contributed to this article.
Write to Ben Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
August 16, 2017 04:01 ET (08:01 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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