Singer's Zinger: How Elliott Showed Its Hand in Akzo BattleBy
Activist shareholder email outlines tactics on takeover fight
Akzo Nobel turns to Dutch regulator about Elliott’s role
The high-stakes takeover battle for Akzo Nobel NV took a bizarre twist after activist shareholder Elliott Advisors, which has aggressively demanded the company talk to its U.S. suitor, inadvertently sent an email to the Dutch paintmaker outlining its tactic for getting the two sides to the negotiating table.
In a message sent in the early hours of April 11 and seen by Bloomberg, Elliott Co-Chief Investment Officer Gordon Singer, the son of founder Paul Singer, purportedly outlined to colleagues the hedge fund’s strategy for seeking to engineer the removal of Akzo Nobel Chairman Antony Burgmans.
The email, which for reasons unknown was also copied to Lloyd Midwinter, head of investor relations at Akzo Nobel, also describes the strategy for communicating with the media as well as with PPG Industries Inc., Akzo Nobel’s rival that has made a $24 billion takeover offer.
The apparent gaffe led Akzo Nobel to turn to the Dutch financial regulator about what it called “potentially price-sensitive information” that Elliott planned to share with PPG. The Authority for the Financial Markets is looking into the matter, board member Gerben Everts said Thursday. A spokeswoman for Elliott declined to confirm the email, while a spokesman for Akzo Nobel confirmed the company was a recipient.
“Our head of investors relations was copied in. The email was mistakenly sent to Akzo Nobel, which led us to believe that potentially price-sensitive information was shared and we have reported that to the AFM,” said Akzo Nobel spokesman Leslie McGibbon.
The embarrassing slip up hands the Amsterdam-based manufacturer much-needed ammunition as Chief Executive Officer Ton Buechner puts the final touches on his plan to counter a takeover by his Pittsburgh-based competitor. He’s scheduled to present this to investors on April 19 in a bid to garner support for staying independent after refusing to hold talks with PPG, a decision Elliott has campaigned to reverse. Akzo Nobel on Wednesday demanded that Elliott and PPG clarify their relationship.
Gordon Singer didn’t provide comment when contacted directly by email about the message. 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.
In the email, Elliott’s Gordon Singer purportedly discusses the investor’s request to Akzo Nobel for an extraordinary shareholders’ meeting with the aim of ousting its chairman, Burgmans, who has said a takeover by PPG would be too risky for the Dutch company for antitrust reasons.
“Wiktor - you should call PPG and let them know that we have sent the EGM request and that now may be an opportune time for PPG to reach out and try to engage,” Singer purportedly writes, addressing a colleague at Elliott.
Should Burgmans accept talks with PPG, the email states that Elliott “will be minded” to rescind the letter requesting the shareholders’ meeting, while it would be made public April 13 or 18 if the chairman declines to engage. The message also envisaged the scenario -- that happened in the end -- that Akzo Nobel would make public the request for an EGM.
“We need to be ready to roll with a responding press release,” Singer purportedly wrote. “I liked the draft I sent on Saturday. So pls whip that into shape.”
The Dutch regulator’s Everts said it’s looking at “signals it receives in the take-over process, also whether price-sensitive information was shared.” He was speaking at the authority’s annual press conference in Amsterdam.
Sharing potentially price-sensitive information is considered market abuse, which includes insider information, and when proven and depending on the severity, could lead to fines or the case being brought to the attention of the Dutch prosecutor, Everts said.
Akzo Nobel, 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. Franklin Templeton Investments said it’s disappointed with Akzo’s refusal to talk with PPG and initial response to the request for an EGM.
Elliott said it and affiliates hold a stake in Akzo Nobel of more than 3 percent. Shares rose 0.9 percent to 79.24 euros at 2:31 p.m. in Amsterdam, compared with PPG’s cash-and-stock offer valued at 88.72 euros a share.