Dutch court dismisses AkzoNobel case

THE Dutch Enterprise Chamber has ruled against Elliott Advisors, a major AkzoNobel shareholder, which had sought to force a special shareholder meeting to dismiss AkzoNobel chairman Antony Burgmans.

The AkzoNobel board has rebuffed three takeover attempts by US rival PPG, and launched its own, stand-alone strategy to sell off its specialty chemicals unit and create more value for shareholders. Elliott Advisors said at the time the petition was filed with the Chamber that under Burgmans’ chairmanship, that the board had failed to fully evaluate the deals, acting “in their own, self-entrenching interests and against the interests of shareholders”, who do not support the stand-alone strategy.

Late on 29 May, the Enterprise Chamber dismissed Elliott’s petition for an injunction against AkzoNobel. It ruled that AkzoNobel had fully analysed the PPG offer and had not breached a duty of care to its shareholders. It noted that the decisions by both the management board and the supervisory board to reject the PPG offer were unanimous. The Chamber recommended, however, that AkzoNobel considers how it can “normalise” relationships with its shareholders.

Elliott said that it is “surprised and disappointed” with Monday night’s ruling.

“Elliott is considering the implications of this judgment for shareholder rights in the Netherlands and for its next steps in relation to AkzoNobel,” the company added.

An AkzoNobel spokesperson told The Chemical Engineer: “AkzoNobel is very pleased that the Enterprise Chamber has decided that its boards have acted in accordance with the highest standards of Dutch corporate governance and it confirms the position/acting of the chairman. The ruling dismisses all the requests of Elliott. AkzoNobel will continue to have a constructive dialogue with its shareholders.”

PPG, meanwhile, said that the matter is between AkzoNobel and its shareholders, but added that it “remains willing to meet with AkzoNobel”, saying: “without productive engagement, PPG will assess and decide whether or not to pursue an offer for AkzoNobel. PPG will make further announcements if and when it is appropriate.”

Experts say that PPG is likely to consider a hostile takeover offer, bypassing the board and going straight to shareholders. Under Dutch law, it has until 1 June to make a decision. John Colley, a professor at Warwick Business School’s Strategy & International Business Group, said that PPG CEO Michael McGarry had little to lose with a hostile takeover.

“The latest bid at €26.9bn [US$28.8bn] represents a 50% premium over the previous undisturbed share price. At this level there can be little doubt that is a better bet than the current board's plan of splitting off the specialty chemicals business and paying €1.6bn in dividends this year. This level of valuation is unlikely to be seen again in the foreseeable future. Even the judge noted that the level of shareholder support is such that it 'cannot be ignored by AkzoNobel’,” he added.