Elliott Loses Latest Legal Battle Against Dutch Paint Maker Akzo Nobel
August 10 2017 - 2:18PM
Dow Jones News
By Ben Dummett
Elliott Management Corp. lost its latest legal challenge
Thursday to remove Akzo Nobel NV's chairman, but the legal decision
signaled that the New York hedge fund could pursue this effort at a
later date.
Last month, an Elliott-led group petitioned the Netherlands'
Interim Relief Court to force the big Dutch paint maker to hold a
shareholder vote on the dismissal of Antony Burgmans.
Elliott argued shareholders had lost confidence in Akzo's
leadership after it rejected calls from Elliott and several other
large shareholders for the company to hold such a vote and enter
into sale talks over PPG Industries Inc.'s $27.6 billion takeover
bid.
Mr. Burgmans's "views on shareholder democracy [are] archaic and
wholly unacceptable in today's capital markets," Elliott said as
partial reason for its legal action. The investor owns a 9.5% stake
in Akzo, making it the company's largest shareholder.
The Dutch court ruled it couldn't force the vote on Mr. Burgmans
dismissal because Akzo has already scheduled a shareholder meeting
for Sept. 8 that will allow investors to hold the board
accountable. Akzo scheduled that meeting last month to hold a vote
on the appointment of its new chief executive, Thierry Vanlancker,
to the company's board of management. Mr. Vanlancker, who had
headed up Akzo's specialty-chemicals business, assumed the top job
after former CEO Ton Buchner unexpectedly resigned for health
reasons. Shareholders won't get to vote on Mr. Burgmans's dismissal
at that meeting.
The court ruled that the Sept. 8 meeting "partially meets the
wishes of shareholders" by giving investors the opportunity to
challenge Akzo's governance practices and thus makes Elliott's
request premature. But the court also indicated that the activist
investor could seek Mr. Burgmans's dismissal after that
meeting.
"We are pleased the court recognized the rights of shareholders
to hold [a shareholder meeting] and make use of a right to dismiss
a member of the supervisory board, although we respectfully
disagree with the notion that accountability is premature," an
Elliott spokeswoman said. An Akzo spokesman couldn't immediately be
reached for comment.
The latest legal decision comes after a lower Dutch court in May
rejected Elliott's previous attempt to force Akzo to hold a vote on
Mr. Burgmans's removal. That court ruled that Akzo had analyzed
PPG's bids seriously and that the dismissal of the company's
chairman is a matter of strategy, making it a decision for
management and Akzo's supervisory board, not shareholders.
Pittsburgh-based PPG dropped its takeover bid in June after Akzo
rejected as too low the initial offer in March and two subsequent
sweetened bids. The company also argued a tie-up would face a
complex and uncertain antitrust review. Akzo is betting that the
planned spinoff of the chemicals business and a plan to boost
dividend payouts would offer shareholders more value and greater
certainty of completion.
Elliott countered that Akzo couldn't make that decision until
first determining if the company could negotiate a better deal
through negotiations with PPG.
Write to Ben Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
August 10, 2017 14:03 ET (18:03 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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