Gates’ Cascade investment trust buoyed by latest twist in Sika governance saga

Three big shareholders in Swiss chemicals firm Sika, among them the investment trust for Microsoft billionaire Bill Gates, Columbia Threadneedle and US-based Southeastern Asset Management, are cheering after a failed attempt by the descendants of the company’s founder to unseat three board directors opposed to the firm’s sale to French glass group Saint Gobain.

In the latest development in an unorthodox Swiss corporate governance saga, Sika’s shareholders last Friday (July 24) voted overwhelmingly (around 87%) at an extraordinary general meeting (EGM) to confirm the three directors against the sale, including Chairman Paul Hälg.

And, according to voting records, Dutch pension giants PGGM and APG as well as Norges Bank, the manager of the Norway’s sovereign wealth fund, all voted in support of the directors as well.

The EGM had been called by the Burkard family, which owns a 16% stake with majority voting rights. The family had wanted to use the EGM to replace the directors, thereby paving the way for the sale of the stake to Saint Gobain for a reported CHF2.75bn (€2.6bn). Sika’s Board is currently split 6 to 3 against the sale.

But like during Sika’s annual meeting last April, Sika’s board limited the family’s voting rights to 5% during the votes on Hälg and the other two.Those rights were also limited during the vote on the family’s candidate to replace Hälg as Chairman.

The decision was cheered by Cascade Investment, Bill and Melinda Gates’ wealth manager.

Cascade prepared for “multi-year battle”

“We express our full support for the decision of Sika’s board to limit the family’s voting rights and praise its continued opposition the hostile takeover attempt by Saint Gobain,” it said in a statement following the EGM.

Cascade also vowed to do everything it could to stop the sale, “even if that requires a multi-year battle.”

Iain Richards, Head of Responsible Investment at Columbia Threadneedle, said he was pleased that the steps taken by his firm and other shareholders to protect Sika’s business were working out. Southeastern echoed Cascade’s pledge of strong support for Sika’s board in its dispute with the family.

Saint Gobain is not giving up on Sika. A spokeswoman for the company said that while the French firm was disappointed with the results of the EGM, it was sticking to its offer for the stake. The offer expires at the end of June 2016. “We have been in business for almost 400 years, so one can say that we are a very patient company,” the spokeswoman said.