By John Revill
ZURICH-- Sika AG said Monday that the Swiss chemicals company's
controlling family no longer has the right to call an extraordinary
general meeting, delivering a blow to French buildings materials
company Saint-Gobain SA's 2.75 billion Swiss franc ($3.1 billion)
bid to take over the company.
The Burkard family, which through its vehicle Schenker-Winkler
Holding AG, has 52.4% of the voting rights in Sika but only 16.1%
of the shares, agreed in December to a takeover offer for its
holding company from Saint-Gobain. The sale, which would give St
Gobain control without having to make an offer for the remaining
83.9% owned by shareholders, has been fiercely opposed by Sika's
board and executives, forcing the family to call an EGM to remove
executives who object to the takeover.
Sika's board said on Monday the family should have its voting
rights restricted to 5% in line with the company's rules that
restrict shareholders to no more than 5% of the voting rights. Sika
said the Burkard family---who are descendants of the company's
founder--had been previously exempt from the rule because of the
family's close association with the company and its assertions that
it would protect it against takeovers.
"Now that the Burkard family-SWH have formed a group with
Saint-Gobain, this historical privilege must be considered lost,
together with the right to convene extraordinary general meetings,"
Sika said.
The decision of Sika's board, which was taken following legal
advice, is now awaiting confirmation by the commercial court in the
canton of Zug, although no date has been set for a decision.
Saint-Gobain said it disagrees with the Sika board's claim.
"Saint-Gobain is advised by its legal counsel that these actions
are clearly against all corporate law and governance principles in
Switzerland," the French company said.
Sika said shareholders representing more than 35% of its total
capital have given their assurance that they support the board of
directors in its efforts to fend off the takeover. Shareholders
including the Bill & Melinda Gates Foundations, Threadneedle
Investments and Fidelity Worldwide Investment have backed the
board's opposition, the company said.
Sika employs 16,000 people, supplies additives for concrete and
cement as well as noise-damping products for the automotive sector.
The company increased sales by 8.3% to 5.57 billion francs in 2014
and said it expected operating profit of more than 600 million
francs. Saint-Gobain is targeting the Sika stake in an attempt to
kick-start its own earnings growth.
The company's chairman Paul Hälg said Saint-Gobain's hostile
takeover was damaging to the entire company, and had unsettled
management and the workforce.
Sika would be dragged back by Saint-Gobain he told a news
conference, and the shareholders would be disadvantaged if the
French company seized control.
"This transaction model cannot work," Mr. Hälg told The Wall
Street Journal on the sidelines of the news conference. "We are
both competitors; they will own only 16% of us, but they will
control us, and for this reason automatically they will prefer
their own business to ours.
"Growth opportunities will all be decided in their favor," he
added. "Over time Sika will lose and Sika shareholders will
lose."
Write to John Revill at john.revill@wsj.com
Inti Landauro in Paris contributed to this article.
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