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Shareholders take Akzo Nobel to court

Monday, May 22, 2017 - 01:39

Akzo Nobel shareholders angered by the Dutch paint maker's rejection of a 26.3 billion euro ($29.5 billion) takeover offer from U.S. rival PPG Industries go to court to seek a pivotal victory in the continuing battle. Ciara Lee reports

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A group of shareholders is taking legal action over a failed merger. They're angry the Dutch paint maker Akzo Nobel rejected a 26.3 billion euro takeover offer from U.S. rival PPG Industries. Led by British hedge fund Elliott Advisors, they want judges to order an investigation into possible mismanagement by Akzo's board. A ruling is expected within a week, soon enough for PPG to decide whether it wants to submit a formal bid to Dutch regulators on June 1st. And without the support of Akzo's board. It'll be a difficult case for both sides. Dutch lawyers say it will be tough for shareholders to convince judges Akzo's corporate governance is bad enough to warrant an investigation. While Akzo will face potentially awkward public questioning of its reasons for rejecting PPG's offer. It has said that the takeover would be bad for employees and that the companies' cultures don't mesh. PPG must also decide whether the merger is worth pursuing, when regulations are on Akzo's side. (SOUNDBITE) (English) BGC MARKET STRATEGIST, MIKE INGRAM, SAYING: "This also might reflect some of the more populist movement that we have seen in Europe. And the government has been quite supportive of Akzo Nobel's management in this matter. And have even been moved to legislate to make it more difficult for shareholders, particularly the activist shareholders such as Elliott in Akzo Nobel's case to unseat existing management." The company's poison pill defence allows shareholders to dismiss managers in the event of a hostile bid. Meaning PPG could end up buying a company it can't control.

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Shareholders take Akzo Nobel to court

Monday, May 22, 2017 - 01:39