A Swiss investment fund, known for taking companies to task over inflated executive bonuses, has launched a challenge against a decision by the family owners of chemicals firm Sika to sell their stake to a French conglomerate.This content was published on December 23, 2014 - 14:28
Ethos Foundation, along with 11 pension and investment funds, have demanded that the firm removes an opt-out clause from its statutes that would allow Saint-Gobain to buy the Burkard family stake without having to extend the same offer to other shareholders.
“This is very detrimental to minority shareholders and endangers one of the flagships of Swiss industry despite the company currently being well positioned in its market with very good growth perspectives,” the Ethos-led protest group said in a statement.
The sale has sparked controversy because the 16% Burkard stake comes with 52% of voting rights thanks to the nature of the shares the family owns. If the deal goes ahead as planned, the French group would gain strategic control of the firm by buying a small fraction of its equity.
Swiss takeover law allows companies to ‘opt-out’ from a requirement for buyers to offer the same purchase terms to all shareholders if they take more than a third of voting rights.
Because of this, the Burkards have been able to demand a high price for their shares - estimated to be a mark-up of nearly 80% on their face value. The family shares are held by the Schenker Winkler Holding entity.
Ethos has demanded that only minority shareholders vote on the resolution to abolish the opt-out clause at the EGM. “In case of rejection, Ethos reserves the right to file an appeal with the Swiss Takeover Board”, the statement read.
The cantonal pension funds of Aargau, Lucerne and Bern, along with the cities of Basel and Zurich, have joined the petition. They are joined by the pension fund of state-owned telecommunications company Swisscom and funds created by banks Raiffeisen, Vontobel and Pictet. Together they hold 1.7% of Sika's equity capital.
Sika said in a statement that it had received the resolution. “The board of directors will examine the request and proposal and will comment in due course,” the company stated.
The EGM was called by the Burkard family earlier this month in order to replace dissenting board members, who opposed the share sale to Saint-Gobin, with hand-picked replacements.
Sika was created by Austrian engineer Kaspar Winkler in 1910 and was later rebranded Sika - the name of first blockbuster compound that was used to give Gotthard railway tunnels a watertight seal to allow for the electrification of the rail lines.
The company, that manufactures a range of industrial sealants and adhesives for use in the motor, marine and construction sectors, achieved sales of more than CHF5 billion ($5.1 billion) and net profits of CHF345 million last year.
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