Akzo Fight With PPG Escalates as Elliott Wants Chairman OutBy and
Dutch firm won’t put removal to vote, inviting legal challenge
Akzo Nobel suggests activist shareholder working with PPG
The battle for control of Akzo Nobel NV escalated after Elliott Advisors called for the chairman’s ouster, drawing a fiery retort from the Dutch paintmaker suggesting the activist shareholder is working with PPG Industries Inc. on its $24 billion takeover offer.
The removal of Chairman Antony Burgmans would be irresponsible and damaging, and Elliott’s move for a shareholder vote on the matter will be rejected, Akzo Nobel said in a statement Wednesday. In reply, Elliott said it would take the matter up with the Amsterdam Court of Appeals’ Enterprise Chamber. Under Dutch law, Akzo investors have the right to request the chairman’s dismissal at a special meeting, according to Elliott.
After weeks of posturing by both sides, Elliott is ramping up pressure on Chief Executive Officer Ton Buechner a week before he’s scheduled to present to investors his own plans to break up the company in a bid to garner support for staying independent. Akzo Nobel has refused to hold talks with PPG and said Elliott should clarify its relationship with the Pittsburgh-based competitor.
“Akzo Nobel is sending a signal that it will use all means to avert the takeover,” Theodoor Gilissen analyst Joost van Beek said by phone. “If you want to make someone mad, the way to do it is to say publicly you’ve informed the Dutch regulator, instead of doing it quietly. It’s logical PPG and Elliott are moving in the same direction, but the question is whether they are working together.”
Akzo said it turned to the Dutch financial regulator after it became aware Tuesday that Elliott intended to share with PPG potentially price-sensitive information about the demand. The regulator said it doesn’t comment on specific cases.
In an April 11 email seen by Bloomberg, Elliott Co-Chief Investment Officer Gordon Singer purportedly asks colleagues that PPG be informed of the request for an extraordinary general meeting that was made via a letter to Akzo Nobel boards and suggests this would be an “opportune time” for the U.S. rival to reach out to engage with Akzo Nobel.
Should Burgmans accept talks with PPG, the email states that the letter would be rescinded. In contrast, it would be made public April 13 or 18 if the chairman declines to engage.
Singer didn’t provide immediate comment when contacted directly by email. Elliott said in a statement it is “aware of its various regulatory obligations, including obligations related to handling price sensitive, or potentially price sensitive, information.” The investor added that it has met with PPG as one of the Dutch company’s top 20 shareholders.
For its part, PPG said Wednesday “there are currently no agreements or arrangements, in whatever form, between PPG and Elliott Advisors.” The company said it has met with Elliott as well as other Akzo Nobel shareholders about its takeover offer and reiterated a call for a meeting with the Dutch company.
An EGM should be convened “at the shortest possible notice,” Elliott said. A decision on the meeting would be made within 14 days as Dutch company law allows, although an agenda item to remove the chairman would be rejected, Akzo Nobel said.
The maker of Dulux paint and chlorine has twice rejected the advances of its rival, saying the latest proposal is too low and not worthy of negotiations. The resistance has come amid pressure from some investors to enter into talks, and the CEO repeated calls to shareholders who may be tempted by PPG’s sweetened offer to wait until the unveiling of his own growth strategy on April 19. Buechner has said he’s been in touch with investors to pitch his plans since PPG first made its approach last month.
Buechner’s vision is centered on the separation of a chemicals division, worth an estimated 9 billion euros ($9.6 billion). Analysts, who will gather in London next week for his presentation, also expect a raft of announcements on new savings and financial targets to compete with PPG’s advances.
Elliott said it and affiliates hold a stake in Akzo Nobel of more than 3 percent, and it’s backed in calling for an EGM by investors holding more than 10 percent. The New York-based fund submitted the request on April 10.
Shares of Akzo Nobel fell 0.7 percent to 78.54 euros in Amsterdam, compared with PPG’s cash-and-stock offer valued at 88.72 euros a share.
— With assistance by Andrew Marc Noel