Swiss Financial Authority Confirms Validity of Sika’s Opt-Out Clause

The Swiss Financial Markets Authority (FINMA) has denied an appeal by the Bill & Melinda Gates Foundation Trust as well as Cascade Investment, which are both shareholders in Swiss specialty chemical company Sika AG. The shareholders were attempting to appeal a decision by the Swiss Takeover Board to uphold Sika’s opt-out clause, which would allow French conglomerate Saint-Gobain to gain the majority of voting rights in the Swiss company without tendering an offer for all shares by purchasing Schenker-Winkler Holding.

SWH controls 16.1 percent of Sika’s capital with 52.4 percent in voting rights. The wording of an opt-out cause means Saint-Gobain does not have to reimburse or buy the remaining shares to gain a controlling voting interest in Sika, according to its investors. The Swiss Takeover Board recently upheld the validity of this clause.

“With today’s decision, FINMA has confirmed the decision of the Swiss Takeover Board pursuant to which the opting-out clause according to the articles of association of Sika AG applies to the proposed acquisition of Schenker-Winkler Holding AG (SWH) by Saint-Gobain and, therefore, Saint-Gobain is not obliged to submit a public tender offer to all shareholders of Sika AG,” according to a statement by Sika.

This is the fourth favorable decision on the validity of the opt-out clause, according to a statement from Saint-Gobain.

“Saint-Gobain welcomes the decision of FINMA which, following other positive decisions, confirms Sika’s articles of association and does not express any reservations as regards to the application of the opt-out clause in the case of Saint-Gobain,” according to the company’s statement. “This opt-out clause exempts Saint-Gobain from launching a compulsory offer due to the acquisition of SWH. FINMA’s decision puts an end to the allegation relating to an abuse of rights claimed by Sika.”
Saint-Gobain says the “delaying tactics” of certain Sika board members when it comes to the transaction can only have “negative consequences for all Sika shareholders.”

“The time has come to act in the best interest of all Sika stakeholders and to start constructive discussions on the future governance of the company,” according to Saint-Gobain. “Saint-Gobain has been and will always be open to such discussions with Sika board members.”

In another move, Sika has submitted a notice to FINMA of a possible breach of the disclosure duty by the Burkard heirs, which own SWH, and Saint-Gobain. This was filed in late April and FINMA has not yet responded.

“The law obliges Sika to file such a notice with FINMA if the company has reasons to believe that a shareholder has not complied with its disclosure duty (article 20 par. 4 Stock Exchange Act). On April 7, 2015, shortly prior to the annual general meeting of shareholders of Sika, the Burkard heirs and Saint-Gobain disclosed that they had dissolved their group. This was reasoned by the sale of the privately-owned Sika shares held by the Burkard family to SWH. However, Sika takes the view that the group among the Burkard heirs, Saint-Gobain and SWH, as it was first disclosed by them on December 11, 2014, continues to exist unchanged,” according to a Sika statement.

“The original purpose—namely ‘ensuring the orderly transfer of control’ of Sika to Saint-Gobain, still exists, as the new contract seen by Sika and the numerous actions of the contract parties since December 5, 2014 confirm,” according to Sika.

Sika is slated to hold an extraordinary general meeting of shareholders on July 24, 2015.

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