Paul Singer‘s Elliott Advisors, one of the most contentious hedge funds in the world, is gearing up for another bitter activist battle. The hedge fund revealed today that it’s taking legal action against Akzo Nobel N.V. (ADR) (OTCMKTS:AKZOY) and Chairman Antony Burgmans after the Dutch paint company shot down a third takeover bid from PPG Industries, Inc. (NYSE:PPG) yesterday, deeming it to be too low.
PPG Industries, Inc. (NYSE:PPG)’s most recent offer of €96.75 ($105.46) per share represents a 24.7% premium on Akzo’s current share price on the Amsterdam Stock Exchange. However, in addition to the price, Akzo also expressed concern over the lack of commitment PPG offered regarding the company’s employees and its environmental interests, with CEO Ton Buechner describing the offer as “undervalued” and demonstrating “a lack of cultural understanding”. Several Dutch politicians have also voiced their opposition to a takeover of Akzo.
Elliott Advisors, which owns 3.25% of Akzo Nobel’s shares, classified the action as “a flagrant breach of Akzo Nobel’s Boards’ fiduciary duties and of Dutch corporate law, and … an arrogant dismissal of recognized principles of proper corporate governance.”
At Insider Monkey, we track insider trading and hedge fund activity to uncover actionable patterns and profit from them. We track over 700 of the most successful hedge funds ever in our database and identify only their best stock picks. Hedge funds are like many other companies in that they bundle products (in this case, stock picks) together and sell them to customers (investors) as a package deal. That means you get their 73rd-best pick along with their best pick, and who wants to pay exorbitant fees for a fund’s 73rd-best idea when you could instead invest in only their best ideas? We are currently offering a 14-day money-back guarantee on our premium newsletters, which include detailed breakdowns of hedge funds’ best performing picks.
Elliott’s legal action will attempt to force the company to hold an extraordinary general meeting (EGM) where shareholders would vote on the status of Burgmans’ employment. The company had previously refused to hold such a meeting after being requested to do so by Elliott, saying that it supported its Chairman. The company also reported Elliott to Dutch regulators at that time, claiming that the hedge fund may have shared sensitive information with PPG.
“Akzo Nobel’s boards continue to demonstrate a disturbing and inexplicable tendency to act in their own, self-entrenching interests and against the interests of shareholders and other stakeholders,” Elliott said in an open letter.
Complicating matters is the fact that even if the Dutch Enterprise Chamber grants Akzo’s shareholders an EGM, it cannot be held for a minimum of 15 days after the ruling, pushing the timeline perilously close to PPG’s June 1 deadline to make a formal bid for Akzo, which the company has said it plans to do.
Should Akzo’s Chairman not be ousted by that point and that offer accepted, PPG would have to wait six months to make another offer.
“PPG continues to believe its proposal is vastly superior in shareholder value creation and provides more certainty to employees and pensioners than Akzo Nobel’s recently announced new stand-alone plan,” PPG said in a news release.
Analysts tend to agree that PPG’s offer would be more lucrative for Akzo shareholders than the company’s stand-alone plan, which calls for it to possibly spin-off its specialty chemicals business and increase its dividend payments to shareholders.