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Hostile takeover


Court blocks Sika family from selling shares




A Zug court has dealt a blow to the family owners of Swiss chemicals manufacturer Sika who want to sell their controlling stake to French industrial group Saint-Gobain.

The court ruling, made public on Friday, has compromised the proposed takeover by preventing the Burkard family from selling their 53% voting rights, via their holding company Schenker-Winkler Holding (SWH), without prior approval from the Sika board. However, the family said it would appeal to a higher court.

The court also upheld Sika's right to restrict Burkard family votes during the last two annual general meetings.

Sika chairman Paul Hälg welcomed the "fair and just outcome" saying that it "puts an end to almost two years of uncertainty, both internally and externally."

He added that the Sika board wants to "reach out" to the family to find "an amicable solution" that would allow the family to sell their shares while keeping Sika independent. 

Sika CEO Jan Jenisch also hoped for an end to the dispute, saying it was now time to sit together and find a solution. “We haven’t got the time to spend another two years in court,” he said.

On Sunday, Urs Burkard, a member of the Sika Board of Directors and spokesperson for the family, gave interviews with Swiss newspapers Zentralschweiz am Sonntag, SonntagsZeitung and Ostschweiz am Sonntag. He stated that the Burkard family remains open to discussion, but stressed that they are still bound by a contract to Saint-Gobain.

Burkard spoke with optimism regarding the family's intended appeal, telling German-language newspaper SonntagsZeitung that his “confidence in the rule of law remains". 

Long-standing feud

The legal verdict on a technicality of Swiss company law comes in the midst of a feud between the descendants of Sika’s founding father versus the company’s board and other shareholders, which dates back to December 2014. 

It was then that the Burkard family announced it was selling its 16% capital stake in the firm to Saint-Gobain for CHF2.75 billion ($2.78 billion).

That price is a staggering 80% mark-up on the face value of the shares. Saint-Gobain are willing to pay that premium because the shares come with a majority of votes – meaning they will control the company if the sale goes through.

The contentious element of the proposed sale is split into two parts. Firstly, Sika’s board grumbles that the Burkards failed to consult them about the deal and have subsequently ignored objections that the merger would damage Sika’s business interests.

The second complaint comes from other shareholders, including the Bill and Melinda Gates Foundation, who would be frozen out of the financial rewards of the deal. Normally, all other shareholders would expect to be offered the same price for their shares if a third or more of voting rights changes hands.

But Sika statutes contain an opt-out clause that renders a wholesale share purchase offer void. Thus, Saint-Gobain could take control of Sika without having to offer any other shareholder a financial olive branch to sweeten the takeover.

Controversial tactics

Sika’s board has resorted to drastic and highly controversial tactics to stymie the deal so far, utilising its only defence that the board must first rubber stamp the share handover to make it valid. For two years running, directors have artificially restricted the Burkard vote at annual general meetings to stop the family from voting in a new, takeover-friendly board.

The Burkard family argued that the sale does not need boardroom approval as, technically, SWH is selling the shares, not family members. The Zug court has now clarified that legal dispute.

Saint-Gobain has consistently said it will not been put off by the long-running legal battle from its intention of buying the Sika stake.

The Burkard family have started legal proceedings against several Sika board members for allegedly wasting company money on the feud. The family has also voted down pay packages for dissenting board members, meaning that some – including chairman Paul Hälg – have been working without remuneration for two years. 

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