Sika Minority Investors Gird for Court Ruling on Takeover Battle

  • Gates Foundation, Fidelity want business plans reviewed
  • Committee with review powers would get mandate extended

The Bill & Melinda Gates Foundation Trust and other minority investors in Sika AG want to extend the mandate of a committee at the Swiss company that has the powers to investigate business conduct in case Cie. de Saint-Gobain SA gains control later this year.

The group that also includes Fidelity Investments International and Columbia Threadneedle Investments want Sika’s so-called office of special experts extended to 2020, according to a statement from the company Monday. The proposal will be considered at the annual shareholders’ meeting April 12.

In asking for the extension, minority shareholders are girding for the possibility that in the coming months a Swiss court could remove a hurdle to the takeover. In December, 2014, the French company offered 2.75 billion Swiss francs ($2.8 billion) to buy a 16 percent stake with majority voting rights in Sika from the founding Burkard family holding. The deal opposed by management and minority investors has been mired in Swiss courts ever since.

Sika’s board supports an extension of the experts’ mandate, according to Monday’s statement. The three-person committee can review and investigate future conduct of business, especially for effects on public shareholders, including by gaining access to board minutes, reports, e-mails and plans, the Swiss company said last year.

Sika on Monday also said it had rejected the proposal of the Burkard family to elect its own candidate, Jacques Bischoff, to the board. It said all the current directors are standing for re-election.

Not Backing Down

Sika’s board has so far been able to block the deal by passing a motion to restrict the Burkard family’s voting share to 5 percent in major decisions about the construction-materials maker, effectively stripping them of their ability to conclude the transaction.

Saint-Gobain, the French glass maker, and the Burkard family two days ago indicated they aren’t backing down in the fight to push through their agreement. They announced an extension of their deal by a year, with the option to extend to the end of 2018. Urs Burkard, leading the family’s efforts to sell the stake, said in a March 12 statement that “no alternative to this transaction is being or will be considered.”

A key ruling is expected in the second half of 2016, when a court in the canton of Zug is scheduled to decide whether restricting the family’s voting rights was legal. If not, then the re-election of directors who oppose the sale could be deemed invalid, removing a major hurdle to the deal.

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