Akzo Reaches Accord With Activist Elliott -- WSJ
August 17 2017 - 3:02AM
Dow Jones News
By Ben Dummett
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 17, 2017).
Akzo Nobel NV reached a truce with Elliott Management Corp. as
the activist investor backed new board members 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 should 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.
Akzo also announced two new nominations to its supervisory
board, backed by Elliott, and intends to nominate a third
supervisory board member, in consultation with major shareholders
including Elliott. The activist investor will support the
appointment of new Akzo CEO Thierry Vanlancker 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 the removal of
Akzo Chairman Antony Burgmans as part of its plan to push for sale
talks.
Akzo said it plans to "fully separate" its specialty-chemicals
business, but didn't specify if that means selling the business
outright or listing it through an initial public offering. An Akzo
spokesman said that it is still considering both options.
Some investors have argued against an IPO of Akzo's
specialty-chemicals business, saying 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 IPO because of the added
difficulty in valuing Akzo because of its continued ownership in
the chemicals business, some investors said.
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," Mr. Burgmans said in
Wednesday's statement.
Last week, Elliott lost a legal challenge to remove Mr. Burgmans
at a company shareholder meeting in September, but the court left
open the ability for the hedge fund to pursue that goal at a later
date.
"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 17, 2017 02:47 ET (06:47 GMT)
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