€27bn battle for Dulux paint maker heading to court
The battle for control of Dulux paint maker AkzoNobel escalated after activist investor Elliott Advisors asked a Dutch court to back its bid to oust the chairman over his refusal to negotiate with US suitor PPG Industries.
Elliott asked the Enterprise Chamber of the Netherlands - a specialist division of the Dutch courts that deals with shareholder disputes - to enforce its request for a vote on firing chairman Antony Burgmans, who the New York-based hedge fund claimed in a statement Tuesday is in "flagrant breach" of his duties to investors for rebuffing PPG's third takeover offer worth about €27bn.
In response, the Amsterdam-based company reiterated its support for Mr Burgmans and said he has played a crucial role in evaluating and rejecting PPG's latest bid. The company doesn't see how the dismissal of the chairman would benefit AkzoNobel or its shareholders in any way, a spokesman said by phone.
The move by Elliott came a day after AkzoNobel rejected PPG's latest takeover bid, raising the prospect that the US rival will go hostile with its offer for the coating and chemical company. After taking two weeks to evaluate the sweetened proposal, AkzoNobel said it's flawed and riddled with risk, defying pressure from shareholders including Elliott and Causeway Capital Management LLC to negotiate.
A spokesman for the Enterprise Chamber confirmed it received Elliott's petition on Monday. The court in central Amsterdam handles corporate disputes and its rulings are binding.
At the crux of the case is AkzoNobel's refusal last month to call an extraordinary shareholders' meeting requested by Elliott and other shareholders to vote on the chairman's ouster.
Elliott is leading a campaign to push AkzoNobel to enter talks with PPG, a move the fiercely independent Dutch company has rejected with the backing of the government in the Netherlands and labour unions.
Elliott contends that under Dutch law, AkzoNobel investors have the right to request a vote on the chairman's dismissal at a special meeting. AkzoNobel has said such as move would go against the spirit of the law and would be "irresponsible, disproportionate, damaging and not in the best interests of the company."
AkzoNobel has said Dutch law allows its board to refuse to put a motion before shareholders for a vote for a number of reasons including if the motion is aimed at changing strategy or goes against "reasonableness and fairness".
PPG has threatened to take the offer directly to investors, and is reviewing its response to Akzo's rebuff.
The Dutch company has said it wants to carry out a breakup strategy to create two companies focused on chemicals and coatings. AkzoNobel shares rose 0.2 percent to €77 in Amsterdam.