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AkzoNobel Brokers Agreement with Elliott Hedge Fund

Thursday, August 17, 2017

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AkzoNobel, a paints and coatings manufacturer based in Amsterdam, announced Wednesday (Aug. 16) that an agreement with hedge fund Elliott Advisors had been reached, bringing a temporary end to the dispute between the two entities over Akzo's refusal to engage in merger talks with PPG.

The agreement, which AkzoNobel says is part of a move to normalize relationships with shareholders, included  discussion of the separation of the company's Specialty Chemicals business. That arm of the company brought in $5.6 billion in revenue last year, according to The New York Times. AkzoNobel’s discussions with Elliott resulted in the two parties reaching an agreement regarding the plan to separate the arm from the company.

PPG Proposals

Elliott’s dispute with AkzoNobel centered around the Dutch paint company’s repeated refusals to consider merger proposals from rival PPG Industries (Pittsburgh). After PPG's initial merger proposals were rebuffed by AkzoNobel management, Elliott stepped in to challenge company management.

The hedge fund, fronted by billionaire Paul Singer, urged AkzoNobel to meet with PPG, then attempted to call an Extraordinary General Meeting on the topic of ousting the company's Supervisory Board chair, Antony Burgmans.

World Economic Forum, CC BY-SA 2.0, via Wikimedia Commons

Elliott Advisers, part of Elliott Management Corporation, founded by billionaire Paul Singer, has come to a truce with AkzoNobel, of which the hedge fund has become the largest shareholder.

Elliott first moved to oust Burgmans in April, when the firm reportedly owned only a 3.25 percent stake in the coatings company. Elliott was dissatisfied with AkzoNobel’s unwillingness to go to the bargaining table with PPG.

“The view of the Supervisory Board is that the removal of Mr. Burgmans would be irresponsible, disproportionate, damaging and not in the best interest of the company, its shareholders and other stakeholders,” AkzoNobel said in a statement in April. “Therefore the proposed agenda item to remove Mr. Burgmans will be rejected.”

Elliott then began litigation regarding the company's duties to its shareholders. During this period, according to The New York Times, Elliott became the Dutch paint company’s largest shareholder, holding 9 percent of the company.

Both entities have agreed to suspend all ongoing litigation for at least three months, assuming the terms of a standstill agreement are met.

Supervisory Board Member Nominations

As part of the process, Elliott has stated that it will support the appointment of Thierry Vanlacker, AkzoNobel’s chief executive, as a member of the Board of Management. AkzoNobel announced Wednesday that two other directors will also be nominated to the company’s supervisory board—Sue Clark and Patrick Thomas.

Clark has served as the European managing director of the global brewer SABMiller, and is currently serving as non-executive director of the soft drinks business of Britvic. Thomas is currently both the chairman and CEO of Covestro A.G., and previously served in the same roles for its predecessor, Bayer MaterialScience A.G.

A third member will also be appointed to the supervisory board, pending discussion with shareholders, including Elliott.

"I am pleased our recent constructive discussions with Elliott improved understanding between both parties,” Burgmans said in a statement.

“We look forward to a continued constructive relationship focused on creating value for all shareholders and other stakeholders,” he added. “This agreement is fully in line with our ongoing program to strengthen and maintain a constructive dialogue with all our shareholders."

AkzoNobel

Paints and coatings manufacturer AkzoNobel announced Wednesday that it had reached an agreement with hedge fund Elliott Advisors, bringing at least a temporary end to the dispute over the Dutch company’s refusal to engage in merger talks with PPG.

Gordon Singer, the CEO of Elliott Advisers and son of Elliott Management founder Paul Singer, noted that the hedge fund was also pleased to enter into the standstill agreement with Akzo.

“We believe AkzoNobel will benefit from the addition of the Supervisory Board nominees,” he said. “Today's agreement marks an important next step in positioning AkzoNobel for success and enabling the company to deliver compelling value to all its stakeholders. As shareholders, we look forward to building upon the recent constructive dialogue with the company.”

The nominated board members will be put forward for shareholders at the Extraordinary General Meeting on Sept. 8.

   

Tagged categories: AkzoNobel; Business management; Business matters; Personnel

Comment from Jesse Melton, (8/17/2017, 7:38 AM)

It's a shame they're going to sell AkzoNobel for parts. A third (or fourth, depending on how you look at it) party has entered the fray, seeking to take the Specialty Chemicals spinoff away from Elliott. The money is lopsided and Elliott won't go that high. That's going to leave Elliott holding a huge stake in an AkzoNobel that is about to spin off its biggest new growth program. Elliott is going to buy more AkzoNobel with the intent of breaking it up.


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