Takeover clash: Akzo Nobel beats back legal challenge

AMSTERDAM • Akzo Nobel successfully dodged a legal challenge from activist shareholder Elliott Management to oust chairman Antony Burgmans, strengthening the Dutch paint-maker's hand in resisting takeover talks with a United States suitor.

The Commercial Court of the Netherlands ruled late on Monday that Akzo Nobel is under no obligation to honour demands from shareholders led by the New York-based fund for a vote on removing Mr Burgmans, 70. Judge Gijs Makkink said the firm did not have to involve investors in decisions regarding unwanted bids from PPG Industries and was within its rights to reject talks with the rival.

Akzo Nobel shares fell 2.2 per cent to €74.71 (S$115.52) at 9.06am in Amsterdam, giving the company a market value of €19 billion.

Elliott had petitioned the Amsterdam court to intervene in the nearly three-month-old takeover battle, alleging Mr Burgmans failed in his duties to investors in refusing meaningful talks and rebuffing three takeover offers by PPG, the latest worth about US$29.5 billion (S$41 billion). The fund, controlled by billionaire Paul Singer, had asked the judge to force Akzo Nobel to allow a vote on Mr Burgmans - a request that garnered support from shareholders holding about 13 per cent of the chemicals manufacturer.

In his ruling, Judge Makkink said that while he did not doubt Akzo Nobel's management, it and the company's board should find a way to normalise relations with shareholders and be more accountable to them on why PPG's offers were rejected. Elliott could appeal Judge Makkink's verdict to the Supreme Court.

ING Bank analyst Stijn Demeester said: "The ruling has reduced the likelihood of a combination with PPG, leaving only a hostile bid as the way going forward." He added that Akzo Nobel's anti-takeover defence mechanism would result in "significant risk" for PPG.

Akzo Nobel spokesman Leslie McGibbon said the company is "very pleased with the result of the court ruling".

Elliott is "surprised and disappointed" with the ruling, and is considering the implications of the judgment for shareholder rights and for its next steps in relation to Akzo Nobel, a spokesman said. PPG said in a separate statement that it is reviewing the court's decision.

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A version of this article appeared in the print edition of The Straits Times on May 31, 2017, with the headline 'Takeover clash: Akzo Nobel beats back legal challenge'. Print Edition | Subscribe