Akzo Nobel wins Dutch court case against activist investor over PPG takeover dispute

Dulex paint owner Akzo Nobel has fended off an attempt by activist investor Elliott Advisors to unseat its chairman after an Amsterdam court swung in the company’s favour.

Elliott had been seeking the removal of Antony Burgmans as chairman after Akzo Nobel rejected a third £23bn takeover bid from US rival PPG Industries Inc (NYSE:PPG).

The hedge fund said Akzo Nobel “failed to fulfil their corporate governance duties towards the company’s stakeholders” in turning down the bids.

Elliott kicked off legal proceedings to oust Burgmans after its request to hold an extraordinary general meeting vote on his position was rejected last month.

The investor said it had enough backing from shareholders to meet a 10% requirement needed for the vote to be held but Akzo said the request was not in the company’s best interests and failed to meet “standards of reasonableness and fairness” under Dutch law.

Elliott considering implications of Dutch ruling on Akzo Nobel…

A Dutch court turned down the investor’s request for a vote yesterday with Judge Gijs Makkink saying Akzo’s board was within its rights to reject entering into talks with PPG.

The judge noted the management faced growing pressure from a number of shareholders who wanted the company to engage in talks with PPG.

Elliott said it was “considering the implications of this judgment for shareholder rights in the Netherlands and for its next steps in relation to Akzo Nobel”

“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,” it said.

The case raises the prospect of a hostile bid by PPG, which has until 1 June to decide whether to file formal papers with Dutch regulators for another takeover attempt.

PPG still weighing another bid for Akzo…

PPG said it was still weighing whether to bid and was ”reviewing the Enterprise Chamber’s ruling”. The firm’s board is scheduled to meet tomorrow when it will discuss the issue.

“PPG remains willing to meet with Akzo Nobel regarding a potential combination of the two companies, but without productive engagement (from Akzo’s boards), PPG will assess and decide whether or not to pursue an offer,” it said in a statement.

Akzo Nobel said it was “very pleased” with the court ruling. The company has argued that the three unsolicited offers from PPG since March have undervalued the business and would lead to job cuts.

Last month Akzo Nobel claimed Elliott planned on sharing “potentially price sensitive” information with PPG and reported the allegations to Dutch financial authorities.

Story by ProactiveInvestors