Akzo Reaches Accord With Activist Elliott -- WSJ

By Ben Dummett Features Dow Jones Newswires

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 17, 2017).

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Akzo Nobel NV reached a truce with Elliott Management Corp. as the activist investor backed new board members following a monthslong standoff over Elliott's push to force the Dutch chemicals company into talks over a $28 billion takeover bid.

In a joint statement Wednesday, the two sides said they reached an agreement on Akzo's strategy to fully separate its specialty-chemicals business, following a disagreement on whether it should be sold or listed. The deal would "normalize the relationship" between Akzo and its shareholders and suspend all litigation for at least three months, they said.

Akzo also announced two new nominations to its supervisory board, backed by Elliott, and intends to nominate a third supervisory board member, in consultation with major shareholders including Elliott. The activist investor will support the appointment of new Akzo CEO Thierry Vanlancker to the board.

The deal follows a bitter dispute between Elliott and Akzo following a protracted takeover attempt from U.S. rival PPG Industries Inc. As one of Akzo's largest investors, Elliott mounted a bold public-relations and legal campaign to try to force the Amsterdam-based company into unwanted sale talks with PPG.

Akzo had argued that its plan to boost dividend payouts and spin off its specialty-chemicals business would generate more value and carry less risk than a sale. But the Elliott-led group said Akzo couldn't make that decision until it first tried to negotiate a deal with PPG.

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Elliott argued that shareholders had lost confidence in Akzo's leadership after it rejected calls from Elliott and several other large shareholders for the company to hold a vote on the removal of Akzo Chairman Antony Burgmans as part of its plan to push for sale talks.

Akzo said it plans to "fully separate" its specialty-chemicals business, but didn't specify if that means selling the business outright or listing it through an initial public offering. An Akzo spokesman said that it is still considering both options.

Some investors have argued against an IPO of Akzo's specialty-chemicals business, saying such a move would make it harder for a future bidder to digest the company if it also owned a significant stake in the publicly traded chemicals company.

Akzo's stock price would more likely trade at a discount to its pure paint-making peers as a result of an IPO because of the added difficulty in valuing Akzo because of its continued ownership in the chemicals business, some investors said.

Elliott is widely known for its brash tactics in activist campaigns against target companies. In recent months it has also campaigned for mining giant BHP Billiton Ltd. to exit its U.S. onshore oil-and-gas assets and collapse its dual-listed structure.

"I am pleased our recent constructive discussions with Elliott improved understanding between both parties," Mr. Burgmans said in Wednesday's statement.

Last week, Elliott lost a legal challenge to remove Mr. Burgmans at a company shareholder meeting in September, but the court left open the ability for the hedge fund to pursue that goal at a later date.

"Today's agreement marks an important next step in positioning Akzo Nobel for success and enabling the company to deliver compelling value to all its stakeholders," said Elliott CEO Gordon Singer.

--Rory Gallivan contributed to this article.

Write to Ben Dummett at ben.dummett@wsj.com

(END) Dow Jones Newswires

August 17, 2017 02:47 ET (06:47 GMT)