The struggle for control of Swiss chemicals group Sika, which has drawn in the likes of the Gates Foundation and other leading investors and become a key governance battleground, has taken yet another twist.
In the latest development, a Swiss High Court has essentially cleared a decision to block the takeover of the adhesives firm by Saint Gobain, the French glass group.
The court did this by throwing out an appeal by the Burkard family, who are the descendants of Sika’s founder.
The family has a 16% stake with majority voting rights (52%) and the appeal would have overturned Sika’s unusual decision to limit those rights to just 5% during the firm’s annual general meeting last April.
This singular move enabled the re-election of six Sika directors who oppose the takeover. Led by Chairman Paul Hälg, they are outnumber by two to one the family’s board representatives.
Big shareholders in the firm like the Bill and Melinda Gates Foundation, Threadneedle Investments, Fidelity and Ethos, the Swiss pension fund-backed proxy firm, are also fighting to keep Sika independent. Also involved is Peter Montagnon, the former chair of the International Corporate Governance Network (ICGN), whom shareholders have voted to sit on a special expert committee. Said Iain Richards, Head of Responsible Investments at Threadneedle: “We welcome the Court’s decision. What is now needed is for the family and other shareholders to engage constructively to discuss their respective concerns and objectives in order to arrive at asensible outcome that can be accepted by both sides and that protects the long-term value of the business.”
The voting restrictions only applied to the vote on the board at the AGM – the other resolutions weren’t affected. They included a failed proposal from Swiss proxy firm Ethos that would have stopped the takeover by forcing Saint Gobain to bid for all of Sika’s shares and not just for the family’s 16% stake.
Despite this contradiction, the High Court, based in Sika’s home canton of Zug, ruled that the voting restrictions were permissible in the interest of maintaining the status quo at the company. It noted that as Swiss regulators had not signed off on Saint Gobain’s acquisition of the family’s stake, that status quo had to be respected.
Asked to explain the Court’s ruling, a Sika spokeswoman said the board’s actions at the AGM were basically vindicated.
She added that the board may even again restrict the family’s voting rights at an extraordinary general meeting (EGM) scheduled for late July, ironically called by the family to replace Hälg and the five other directors.
The High Court did not address the question of whether it was legal for Sika to restrict the family’s voting rights. That is being handled by another court in Zug and Sika expects a decision on that next year.
Saint Gobain is not giving up: it has extended its bid for the 16% stake – and likely control of the company – until the middle of next year.
Link to High Court decision (German)