Management

Chris Hughes is a Bloomberg Gadfly columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.

If Dutch companies thought they could relax after a judge squished Elliott Advisors' attempt to remove Akzo Nobel NV's chairman in May, they should think again. The U.S. hedge fund is having another pop at getting rid of Antony Burgmans as part of a classic war of attrition.

Burgmans' current four-year term expires at the paintmaker's annual meeting next April. Given he would have been on the board 12 years by then, it's highly likely he won't stand again. If so, it would be customary to announce a replacement some time later this year.

Pressure to Deliver
An aborted U.S. bid for Akzo Nobel prompted a new strategy, and a much-needed share price boost
Source: Bloomberg

That's not soon enough for Elliott. The activist investor is still fuming about Burgmans' handling of PPG Industries Inc.'s failed takeover approach. In April, Akzo rejected Elliott's request for a special meeting to remove the chairman. Elliott lost a subsequent legal challenge. But the fund is now exercising its right to ask a different court to force a shareholder meeting with the same resolution.

Suppose Elliott loses again, it can start other battles. It could go back to Akzo seeking another EGM, but with a different resolution. If Akzo refused, Elliott could go back to the courts. And so it would go on. As a shareholder in a Dutch company, Elliott has fewer rights than would be the case elsewhere. If it has no faith in Burgmans, it's entitled to take this action.

Share of Voice
Elliott's claimed interest makes it the top shareholder in Akzo Nobel
Source: Bloomberg, Elliott Advisors

This is clearly a distraction to management. But Elliott isn't a rogue shareholder. It claims to have about 9.5 percent. What's more, other shareholders with at least the same interest have in some way criticized management's handling of the PPG situation earlier this year. It probably won't stop there.

Akzo would be well advised to get a move on naming a successor to Burgmans -- ideally an outsider -- and putting that person on the board as soon as possible, and then accelerating the handover. That could neutralize some opposition and might even enable Burgmans to carry a majority of the vote if Elliott gets one.

After PPG withdrew its attempted takeover, it looked like activists might be twice shy of picking a fresh corporate battle in the Netherlands. If that's not true of Elliott, it may not be true of other activists either. That should keep the likes of Koninklijke Philips NV and Unilever NV on their toes.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Chris Hughes in London at chughes89@bloomberg.net

To contact the editor responsible for this story:
Katrina Nicholas at knicholas2@bloomberg.net