Dulux parent, Akzo Nobel announced it has had a recent “constructive dialogue” with affiliates of Elliott Advisors (UK) Limited (collectively "Elliott") and reached an agreement with the firm. The move follows Akzo’s wrangle with shareholders – hedge fund, Elliott in particular – during an attempted takeover bid by US rival PPG Industries, and has been made with the aim of “normalising the relationship with shareholders”, says the paint giant.
The agreement includes alignment on the Akzo Nobel strategy to fully separate Specialty Chemicals. In addition, Elliott will support the appointment of Mr. Thierry Vanlancker as a member of the board of management of AkzoNobel at the upcoming Extraordinary General Meeting on September 8, 2017.
Akzo’s relationship with its shareholders became strained during PPG’s attempt to acquire the business, with pressure to consider the deal put forward by the US company. Akzo had already dismissed earlier offers from PPG and had announced its commitment to its own growth strategy, which would see it either float or sell its Speciality Chemicals division.
Hedge fund, Elliott Advisors – an activist shareholder that owns more than 3% of Akzo - piled the pressure on, announcing that thousands of jobs would be lost if Akzo pursued the independence plan it put forward as an alternative to merging with PPG.
To further compound matters, a group of shareholders, led by Elliott, attempted to oust Akzo chairman Antony Burgmans, calling a special general meeting and reportedly blaming him for refusing to engage in talks with US firm PPG, which had, by that point made three offers to acquire the company.
In its response to the call for the removal of Mr Burgmans, Akzo revealed that it has reported Elliott Advisors to the Dutch Authority for the Financial Markets (AFM).
However, the latest announcement explains that Akzo Nobel and Elliott have agreed, subject to the terms of a standstill agreement, to seek to suspend all ongoing litigation for at least three months.
Meanwhile, Akzo has announced two new nominations to its Supervisory Board: Sue Clark and Patrick Thomas - both of which are supported by Elliott – and intends to nominate a third Supervisory Board member, which will be done in consultation with the company's major shareholders, including Elliott.
Akzo chairman of the Supervisory Board Antony Burgmans commented: "I am pleased our recent constructive discussions with Elliott improved understanding between both parties. Akzo Nobel remains focused on creating two world-class, high-performing businesses; Specialty Chemicals and Paints and Coatings. We look forward to a continued constructive relationship focused on creating value for all shareholders and other stakeholders. This agreement is fully in line with our ongoing program to strengthen and maintain a constructive dialogue with all our shareholders. We look forward to a successful EGM on September 8."
Elliott Advisors (UK) Limited CEO Gordon Singer added: "Elliott is pleased to have entered into today's standstill agreement with Akzo Nobel. We believe Akzo Nobel will benefit from the addition of the Supervisory Board nominees. Today's agreement marks an important next step in positioning Akzo Nobel for success and enabling the company to deliver compelling value to all its stakeholders. As shareholders, we look forward to building upon the recent constructive dialogue with the company."
This agreement follows a wide-ranging set of measures previously outlined by Akzo Nobel on July 25 when it announced its results, designed to strengthen and maintain a constructive dialogue with its shareholders.