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Shareholder Turmoil Heats Up at AkzoNobel

Tuesday, May 16, 2017

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Shareholders of Dutch coatings giant AkzoNobel are raising concerns amid the company’s rejection of rival PPG Industries’ third merger proposal earlier this month.

The Letter

Before that decision was made public on May 8, members of top 20 shareholder Tweedy, Browne Company LLC penned a letter to AkzoNobel’s supervisory board chair Antony Burgmans on May 4 berating the company for its decisions regarding PPG and a perceived lack of transparency in those decisions.

“Being shareholders for 25 years has unfortunately not been a fruitful experience and our patience is wearing thin,” the letter says in its introduction.

Photos: AkzoNobel

Shareholders of Dutch coatings giant AkzoNobel are raising concerns amid the company’s third rejection of rival PPG Industries’ third merger proposal earlier this month.

The American fund managing company accused AkzoNobel of hypocrisy, highlighting the companies that it has acquired and asking, “Why is the reverse problematic? Is this the (in)famous and self-defined 'level playing field'? Or is this asymmetrical capitalism in the fashion of Orwell, where different rules apply to different players? Is buying more acceptable than being bought?”

The letter concluded with a graph on the PPG decisions, saying, “There are no valid reasons left for Akzo Nobel to not at least talk to PPG. It owes no less to everybody involved. The decision not to proceed can still be made but it would of course require transparency and a detailed explanation rather than qualitative smoke and mirrors.”

A similar sentiment was expressed by PPG when the rejection of its “third and final” offer had been announced. Although CEO Ton Büchner and Burgmans met with PPG Chairman and CEO Michael McGarry and Lead Independent Director Hugh Grant, PPG said in its statement that the meeting was rushed and that AkzoNobel executives stated up front that “they did not have the intent nor the authority to negotiate.”

AkzoNobel says that CEO Ton Büchner (pictured, left) and Supervisory Board Chair Antony Burgmans (right) met with PPG Chairman and CEO Michael McGarry and Lead Independent Director Hugh Grant.

AkzoNobel, meanwhile, has maintained that they have thought carefully about the proposal, though the first two offers were dismissed almost immediately. The company has also come to the defense of Burgmans, despite shareholders calling for an extraordinary general meeting to vote him out.

Going to Court

That charge was led by Elliott Advisors, which has since begun legal proceedings in an attempt to remove Burgmans. The investor filed a petition with the Enterprise Chamber—the division of the Amsterdam Court of Appeal that deals with corporate affairs—on May 9. The goal is to force AkzoNobel to hold the EGM that they had refused Elliott and vote.

“Akzo Nobel’s board continues to demonstrate a disturbing and inexplicable tendency to act in their own, self-entrenching interests and against the interests of shareholders and other stakeholders,” Elliott said.

“Elliott filed a petition ... to enforce the rights of Akzo Nobel’s shareholders to hold the requested EGM to vote on the dismissal of Mr. Burgmans for failing to discharge his fiduciary and corporate governance duties.”

A request to AkzoNobel for comment was not returned by Monday afternoon (May 15).

Editor's note: This story was one of our most popular of 2017, and appeared in our Readers' Choice issue on Dec. 28. Since the article originally ran, AkzoNobel made several acquisitions; Elliott Advisors, an arm of investor Paul Singer’s Elliott Management, became the largest shareholder of the company; and CEO Ton Büchner resigned, with Thierry Vanlancker stepping into the role.

   

Tagged categories: AkzoNobel; Business matters; Mergers; Personnel; PPG

Comment from Jesse Melton, (5/16/2017, 8:11 AM)

Tweedy, Browne own 3% of AkzoNobel outstanding shares. They have a voice, but it's not a loud one. Elliott Advisers, who were rebuffed in their call for a special meeting to out Burgmans. Now they're trying to arrange an adjudicated meeting with the same goal. The proceedings are not expected to go to a hearing.

I realize this article is just a wire service story, but it's worded in a way that makes it appear significant numbers of voting shareholders are in favor of the PPG deal, and that's simply not the case.


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