Akzo Nobel and activist investor call a truce

AMSTERDAM • Akzo Nobel and activist investor Elliott Management agreed to end their legal skirmishes that had dragged the two parties into acrimonious confrontations, giving new chief executive officer Thierry Vanlancker some breathing space to proceed with a planned split of the Dutch paint-and-chemicals maker.

Elliott agreed to back the swearing-in of Mr Vanlancker as CEO on Sept 8 and also supports Akzo Nobel's plan to separate its chemicals division, the company said in a statement yesterday.

In a concession to shareholders upset by Akzo's steadfast refusal to explore a tie-up with PPG Industries, investors will have a say in the nomination of a supervisory board member.

Mr Vanlancker now has a clear run at exiting the €10 billion (S$16 billion) division to prove Akzo Nobel's strategy is superior to PPG's rejected US$29 billion (S$39.6 billion) proposal. His predecessor Ton Buechner buckled under the pressure of the fight.

The agreement comes as Mr Paul Singer's fund last week lost a second lawsuit aimed at removing chairman Antony Burgmans for his part in rebuffing PPG. Elliott lost a separate case earlier this year though a judge ordered the paint-maker to restore its relationship with shareholders.

"Elliott suffered some setbacks but, as an activist investor, it will obviously continue to put pressure on Akzo Nobel," Theodoor Gilissen analyst Joost van Beek said by phone. "The gap between the price PPG was willing to pay and what Akzo is worth now remains a bottleneck for shareholders."

Akzo Nobel shares climbed 1.6 per cent to €77.77 as of 9.19am yesterday in Amsterdam.

Elliott became a shareholder prior to PPG coming on the scene, in a bet that Akzo Nobel was ripe for a break-up. It then changed tack, and led a campaign for talks with PPG, and mounted a series of court cases to have Mr Burgmans removed. The New York-based fund is known for using lawsuits and the media to force change at companies.

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A version of this article appeared in the print edition of The Straits Times on August 17, 2017, with the headline 'Akzo Nobel and activist investor call a truce'. Print Edition | Subscribe