AMSTERDAM (Reuters) - Akzo Nobel (AKZO.AS) does not have to let shareholders vote on whether to dismiss its chairman, a Dutch court ruled on Thursday, handing the paint company another victory in its battle with U.S. activist investor Elliott Advisors.
Elliott, Akzo’s largest shareholder with a 9.5 percent stake, holds Chairman Antony Burgmans responsible for Akzo’s rejection of a 26 billion-euro (23.5 billion pounds) takeover proposal from U.S. rival PPG Industries (PPG.N) earlier this year and wants him dismissed.
Together with York Capital Management, which holds a 0.6 percent stake in the maker of Dulux paints, Elliott had petitioned the court to force Akzo to convene an extraordinary shareholders’ meeting on Burgmans’ dismissal, which Akzo had refused to do.
The Amsterdam district court on Thursday said the request was premature, given that Akzo has already scheduled an extraordinary shareholders’ meeting for Sept. 8. It called the meeting to better explain its reasons for rejecting the PPG bid and to repair relations with disgruntled shareholders.
“After that meeting it is up to shareholders to draw conclusions and possibly take further action,” the court said.
Elliott said the court had recognised the right of shareholders to dismiss a member of the supervisory board and that the pressure was now on Akzo to “convincingly explain its actions” at the September meeting.
AkzoNobel said it had taken note of the verdict and that it was looking forward to the shareholders’ meeting.
A first bid by Elliott to force Akzo to hold a vote on Burgmans’ position was rejected by Amsterdam’s Enterprise Chamber in May, as it said it was an inappropriate attempt to wrest control of the company’s strategic direction from the board.
Last month, the 70-year old Burgmans said he will resign at the end of his term in April 2018. Akzo CEO Ton Buechner abruptly stepped down last month, citing health reasons, and has been replaced by Thierry Vanlancker, the former head of the company’s chemicals division.
Akzo and Pittsburgh-based PPG are in a six-month compulsory cooling-off period which expires in December.
Reporting by Bart Meijer; Editing by Greg Mahlich and Adrian Croft