Akzo rejects Elliott call for extraordinary meeting
Hedge fund rebuffed over demand for gathering to oust chairman in takeover tussle
Akzo Nobel, the Dutch paintmaker at the centre of a €26.9bn takeover battle, has dismissed a request from activist investor Elliott to hold a special shareholder meeting aimed at ousting the company’s chairman.
The hedge fund had led a band of shareholders who called for an extraordinary general meeting to remove Antony Burgmans, as part of its campaign to force Akzo Nobel into talks with its larger US rival PPG Industries over a possible sale.
But Akzo Nobel rebuffed the EGM request on Tuesday, saying it did not meet the standards required under Dutch law.
The company noted that while investors representing more than 10 per cent of shares have the right to call a general meeting under Dutch law, this includes “meeting standards of reasonableness and fairness and a ‘legitimate interest’ test.
“The request is irresponsible, disproportionate, damaging and not in the best interests of the company. Given the sole agenda item [to remove Mr Burgmans], there is no legal basis for calling an EGM,” it added.
Elliott slammed the rejection as “groundless” and “an egregious dismissal of shareholder rights”, saying it believed Akzo Nobel was “afraid” of defeat in a vote.
The hedge fund added: “As far as Elliott is aware, it is unprecedented in European corporate history to have several large shareholders request the convocation of an EGM of a major corporate, and the fact that six Akzo Nobel shareholders have done so in this instance is indicative of the breadth and depth of shareholder discontent”.
The rejection is the latest twist in what has become a bitter transatlantic tussle over the fate of one of Europe’s oldest industrial concerns.
Akzo Nobel, which owns the Dulux brand of paints, has already knocked back two takeover proposals from PPG. It argued they undervalued the company, risked a lengthy antitrust review and would lead to substantial job losses.
Given the sole agenda item [to remove Antony Burgmans], there is no legal basis for calling an EGM
Akzo Nobel
However this has stirred dissent among Akzo’s own investors, heaping pressure on chief executive Ton Büchner. Shareholders owning roughly 17 per cent of the stock have urged it to the negotiating table.
PPG raised the tempo on Monday by tabling an improved third takeover bid, which it said was its “last” friendly overture before it would take hostile action. The increased cash-and-stock offer is worth €96.75 a share — up from a prior bid of €90 and a premium of 50 per cent to Akzo’s undisturbed share price.
The latest offer consists of €61.50 in cash, the remainder in PPG shares, and includes the payment of Akzo’s dividend. It values the Dutch company’s equity at €24.6bn. Akzo Nobel has said it will “carefully consider and review” the bid.
Last week Akzo unveiled €1.6bn in dividend payments and gave more details on a planned separation of its speciality chemicals unit, which will leave a business focused on paints and coatings.
Elliott, which holds a roughly 3 per cent stake, has criticised Akzo Nobel’s approach to corporate governance in its handling of the situation. But Mr Büchner received a boost on Tuesday as shareholders approved all resolutions at its annual general meeting.
Shares in Akzo Nobel rose 0.9 per cent to €82.64 on Tuesday.
Elliott has previously threatened recourse to the Dutch courts if the EGM request were turned down.