A group of international investors led by the $42bn (€39.6bn) Bill and Melinda Gates Foundation Trust has succeeded in getting shareholders in embattled Swiss adhesives firm Sika to approve an audit of the company as well as the creation of a special expert committee to monitor Sika’s board over the next two years.
Sika’s shareholders approved the corresponding proposals from the trust last night (April 14) during the Swiss company’s annual general meeting (AGM). The proposals’ other sponsors were Cascade Investment, the manager of Bill Gates’ personal wealth, Fidelity Investments and Threadneedle.
As reported, the audit is to determine whether any insider information was leaked to Saint Gobain, the French glass group that wants to take Sika over, in the last two years.
The committee will include Peter Montagnon, a former Financial Times journalist who has chaired the International Corporate Governance Network (ICGN) as well as taking senior roles at the Association of British Insurers and the UK’s Financial Reporting Council watchdog.
The panel has been appointed until Sika’s AGM in 2017, with the brief to monitor Sika’s board and inform shareholders about things are being handled.
Investors backing the proposed panel included Norges Bank Investment Management, which runs Norway’s NOK6.5trn (€772bn) sovereign fund, and Dutch pension investor PGGM, which backed it “in light of concerns about potential conflicts of interest between the board of directors and Schenker-Winkler/Saint-Gobain”.
Meanwhile, Saint Gobain’s takeover of Sika has been halted as a result of last night’s re-election of six board members, including Chairman Paul Hälg, who oppose the bid.This is because they outnumber the other three directors, led by Urs Burkard, a descendant of Sika’s founder who wants to sell the firm to Saint Gobain.
During the elections of Hälg and the other five members opposed to the bid, Sika suppressed the 53% voting majority that the Burkard family holds with their 16% stake in the company. Their voting rights were limited to 5%.
During the votes on Urs Burkard and his two allies, however, Sika removed the 5% cap, ensuring their re-election with at least 80% support. Sika also lifted the cap on the votes concerning the audit and the special committee as well as the proposal from Swiss proxy firm Ethos to strike an “opting-out clause” from the company’s articles of association.
That clause is at the centre of the takeover battle at Sika, for it allows Saint Gobain to “opt out” of bidding for all of Sika’s shares after simply acquiring the 16% stake held by the Burkard family. As the 5% cap did not apply to Ethos’ proposal, the family ensured that it was voted down. Ethos’ proposal did, however, garner 30% support from Sika’s shareholders, including the bloc around the Gates Foundation, and other big shareholders like Norges Bank and PGGM. Norges and PGGM also voted against Urs Burkard and his allies for Sika’s board as well as a bid by the family to oust Paul Hälg as Chairman.
But the fight for control of the company is by no means over. Prior to the event, the family vowed to challenge in the courts Sika’s decision to suppress its majority voting rights during the elections of Hälg and the other directors opposed to Saint Gobain. The family also struck back symbolically during the AGM, using its majority to deny Sika’s board discharge for 2014 and striking down a proposal setting future compensation for the board.