LONDON, AMSTERDAM (Reuters) - Activist investor CIAM has criticized plans by Dutch food and retail group Ahold Delhaize (AD.AS) to renew a governance structure that it said acts as a “poison pill” to potential suitors and has served to keep its share price depressed.
Ahold has a legal structure known as a “stichting”, or foundation, which is favored by many Dutch companies and effectively gives a holding vehicle the voting power to fend off unwanted acquirers, often to the frustration of investors.
“Anything that looks like a poison pill is a problem of governance,” Anne-Sophie D’Andlau, co-founder at hedge fund firm CIAM, told Reuters.
Ahold’s stichting was first introduced in 2003 and will expire in December 2018. Renewal will be discussed at the company’s annual general meeting on April 11, but the management team has said it will not be put to a vote.
In a statement to Reuters, Ahold said: “Valuing a transparent approach to our shareholders, we have put the item on the agenda for discussion at the upcoming AGM.”
Ahold CEO Dick Boer told Reuters last month that the decision on a possible extension will be made by the management board with approval by the supervisory board.
France’s CIAM, which owns less than 1 percent of Ahold, said it is “unlawful” not to put the stichting to a vote.
“We are opposed to the renewal,” CIAM Chief Executive Catherine Berjal said in a March 12 letter to Ahold’s management board, adding that the firm believed the matter should be put to a vote at the AGM or an extraordinary general meeting.
The letter, which CIAM shared with Reuters, said the board had proposed a vote on the stichting arrangement in 2016 but then removed the item from the agenda.
“For us there is undervaluation because of the stichting,” D’Andlau said on Thursday. “Governance across Europe has to evolve.”
Competition from online giant Amazon (AMZN.O) has sparked market speculation of consolidation in Ahold’s sector, with suggestions that Ahold could team up with another U.S. player, such as Kroger (KR.N).
Dutch telecom company KPN (KPN.AS) famously blocked a bid from Mexican billionaire Carlos Slim by triggering a similar structure in 2013.
Akzo Nobel (AKZO.AS) had a stichting in place, which it did not deploy, when the Netherlands-based paint maker clashed with Paul Singer’s hedge fund firm Elliott Advisors over a challenge to the company’s board.
D’Andlau told Reuters that CIAM had not decided on its next step if the Ahold board declines to put the renewal to a shareholder vote.
Reporting by Maiya Keidan and Anthony Deutsch, additional reporting by Toby Sterling; Editing by David Goodman