Sika's Fight Against Saint-Gobain Drags On as Board Renewed

  • Shareholders re-elect chairman, directors resisting French bid
  • Founding Burkard family holding denied board seat at AGM

An employees loads cans of Sikalastic coating onto a pallet at a Sika AG liquid applied membrane technology manufacturing facility in Preston, U.K.

Photographer: Jason Alden/Bloomberg

Sika AG minority shareholders won an important round in their 16-month battle to ward off a sale to a French competitor after re-electing half a dozen directors to the board who support their cause.

At Sika’s annual meeting in Baar, Switzerland on Tuesday, Chairman Paul Haelg restricted voting rights of the founding Burkard family, allowing six directors including himself to be re-elected to the nine-member board for another year.

Sika’s management and the Burkards are at odds over Cie de Saint-Gobain SA’s offer to the founder’s heirs of 2.75 billion Swiss francs ($2.9 billion) for their 16 percent stake with majority voting rights. The bid was at a premium to share prices and excluded other shareholders. With control of the board remaining in the hands of Haelg and directors opposed to the sale, the deal is expected to remain blocked and mired in Swiss courts.

“It’s just delaying tactics,” Urs Schenker, a family representative, told the meeting, which was punctuated by heckling from investors. “You’re trying to drive out Saint-Gobain, to get Saint-Gobain off the scene.”

In order to push through the board re-election, Haelg used a procedure adopted last year of restricting the voting rights of the Burkard family’s Schenker-Winkler Holding to just 5 percent from 52 percent. Shareholders also rejected a proposal by the holding company to elect Jacques Bischoff to the board.

“This is not North Korea here,” Roger Koeppel, a Swiss lawmaker and magazine editor, told the meeting. “The protection of private property is a cornerstone of market economy and hence a basic pillar of Switzerland and our prosperity.”

Sika shares were suspended from trading in Zurich ahead of the annual meeting. They were down 0.1 percent at 3,866 francs, giving the company a market capitalization of 9.8 billion francs. Saint-Gobain shares closed 0.3 percent higher to 38.73 euros in Paris.

In a bid to build support for its offer, Saint-Gobain pledged Monday in a letter to Sika employees to accelerate development of the company without cutting jobs while at the same time keeping the headquarters and stock market listing in Switzerland.

Tuesday’s meeting was attended by more than 400 shareholders, with Sika managers sporting white T-shirts emblazoned with the company logo and ‘Still an Employee of Sika’ across the front.

Swiss Courts

Management and minority investors have opposed the deal since it was announced in December, 2014, saying it makes no strategic sense and is unfair to other shareholders left out of the Saint-Gobain offer.

The outcome is in the hands of a Swiss court, which is expected to decide before the end of the year on the legality of the board’s move to limit the family holding’s voting rights on decisions crucial to the future of the company. If not, then the re-election of directors who oppose the sale could be deemed invalid, removing a major hurdle to the deal.

Shareholder the Bill & Melinda Gates Foundation Trust will continue its fight against the deal, representative Justin Howell said in an interview ahead of the meeting. The trust, along with the Microsoft co-founder’s Cascade Investment have said in a letter they support Haelg. They are joined by other minority shareholders in Sika including Fidelity Investments, Columbia Threadneedle Investments and Southeastern Asset Management.

“We want to set a precedent for Switzerland and more broadly across the world that we will stand up for good corporate governance and will not be pushed around,” Howell said. “The transaction as it is currently structured is unacceptable.”

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