LONDON (ShareCast) - (ShareCast News) - Elliott Advisors has launched legal action to oust AkzoNobel chairman Antony Burgmans after the company rejected a third unsolicited takeover offer from US chemicals manufacturer PPG Industries.
Elliott, which has a 3% stake in the company and has been trying to get it to engage in talks with PPG, said Akzo's rejection of its third proposal "without entering into any constructive form of engagement" is "a flagrant breach of AkzoNobel's boards' fiduciary duties and of Dutch corporate law" and "an arrogant dismissal of recognised principles of proper corporate governance".

In addition, it said the Dutch company's reasons for declining the offer were unconvincing and unsupported by any available evidence.

On Monday, Akzo rejected PPG's third offer, received on 24 April and sweetened to €96.75 a share, up €6.75 from the second offer. It said the latest offer undervalues the company, adding that its own strategy, presented on 19 April, offers a superior route to growth and long-term value creation and is in the best interests of shareholders and all other stakeholders.

Chief executive officer Ton Buchner said: "The PPG proposal undervalues AkzoNobel, contains significant risks and uncertainties, makes no substantive commitments to stakeholders and demonstrates a lack of cultural understanding.

"By contrast, AkzoNobel has outlined a compelling strategy to accelerate growth and value creation which we believe will deliver significant long-term value for our shareholders and all other stakeholders. We will deliver this within a clear timeline, without the substantial level of risks and uncertainties attached to the alternative proposal."

Elliott disagrees, however, and has filed a petition with the Enterprise Chamber to enforce the rights of shareholders to hold the requested EGM to vote on the dismissal of chairman Burgmans.

"Elliott believes that PPG's third proposal sufficiently addresses the concerns expressed by the boards to warrant AkzoNobel's sincere and constructive engagement with PPG. Moreover, Elliott notes that such engagement would be in the best interests of all stakeholders, including shareholders, pensioners, employees and customers.

"Elliott believes there is nothing 'irresponsible, disproportionate or damaging', as alleged by AkzoNobel, about allowing shareholders to hold a democratic vote on Mr. Burgmans' suitability to continue as chairman and member of the Supervisory Board."

At 0930 BST, the shares were up 0.8% to €77.47.

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