By John Revill
ZURICH-- Sika AG said on Monday that it has curbed the voting
power of its controlling family, delivering a blow to French
buildings materials company Saint-Gobain SA, which is trying to
take over the Swiss chemicals company.
The move by Sika's board also makes it no longer possible for
the Burkard family's investment company--Schenker-Winkler Holding
AG--to call an extraordinary shareholder meeting to oust executives
opposed to the 2.75 billion Swiss franc ($3.1 billion) takeover by
Saint-Gobain.
The Burkard family agreed in December to a takeover offer for
its holding company from Saint-Gobain, one of Europe's biggest
building-materials groups by revenue. SWH currently has 52.4% of
the voting rights in Sika but only 16.1% of the shares.
The sale, which would give St Gobain control without having to
make an offer for the remaining 83.9% owned by shareholders, has
been fiercely opposed by Sika's board and executives, forcing the
family to call an EGM to remove executives who object to the
takeover.
Sika's board said on Monday that the family should have its
voting rights restricted in line with the company's rules which
limit other shareholders to no more than 5% of the voting rights.
Sika said that the Burkard family--descendants of the company's
founder--had previously been exempt from the rule because of the
family's close association with the company and its assertions that
it would protect it against takeover bids.
"Now that the Burkard family-SWH have formed a group with
Saint-Gobain, this historical privilege must be considered lost,
together with the right to convene extraordinary general meetings,"
Sika said.
The decision of Sika's board, which was taken following legal
advice, is now awaiting confirmation by the commercial court in the
canton of Zug, though no date has been set for a decision.
Saint-Gobain said it disagrees with the Sika board's claim.
"Saint-Gobain is advised by its legal counsel that these actions
are clearly against all corporate law and governance principles in
Switzerland," the French company said.
SWH described the move to restrict its voting rights as illegal
and said in a statement it would use to "all necessary legal means
to enforce its rights."
Sika said shareholders representing more than 35% of its total
capital have given their assurance that they support the board of
directors in its efforts to fend off the takeover. Shareholders
including the Bill & Melinda Gates Foundation, Threadneedle
Investments and Fidelity Worldwide Investment have backed the
board's opposition, the company said.
Fidelity Worldwide Investment and Threadneedle Investment
confirmed they backed Sika's management. A Threadneedle spokesman
said: "This is an appropriate and prudent move by Sika's board and
one that is clearly in the best interests of the company." The Bill
& Melinda Gates Foundation couldn't be immediately reached for
comment.
Sika employs 16,000 people, supplies additives for concrete and
cement as well as noise-damping products for the automotive sector.
The company increased sales by 8.3% to 5.57 billion francs in 2014
and said it expected operating profit of more than 600 million
francs. Saint-Gobain is targeting the Sika stake in an attempt to
kick-start its own earnings growth.
The company's chairman Paul Hälg said Saint-Gobain's hostile
takeover was damaging to the entire company, and had unsettled
management and the workforce.
Sika's performance would be held back by Saint-Gobain while
shareholders would be disadvantaged if the French company seized
control, Mr. Hälg said.
"This transaction model cannot work," he told The Wall Street
Journal on the sidelines of the news conference.
"We are both competitors; they will own only 16% of us, but they
will control us, and for this reason automatically they will prefer
their own business to ours," he said. "Growth opportunities will
all be decided in their favor," he added. "Over time Sika will lose
and Sika shareholders will lose."
Write to John Revill at john.revill@wsj.com
Inti Landauro in Paris contributed to this article.
Write to John Revill at john.revill@wsj.com
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