Swiss Administrative Court: Saint-Gobain Is Not Obligated to Extend Offer to All Shareholders

Sika chairman Paul Hälg speaks during the company’s annual general meeting.

Sika chairman Paul Hälg speaks during the company’s annual general meeting.

The Swiss Federal Administrative Court (FAC) had upheld Swiss specialty chemical company SIKA AG’s opt-out clause, rejecting a complaint filed over the clause by the Bill and Melinda Gates Foundation Trust and Cascade Investment. The court drama began after French conglomerate Saint-Gobain’s plan to gain a controlling interest in SIKA by acquiring Schenker-Winkler Holding (SWH) was revealed late last year.

SWH, which is owned by the Burkard family, controls 16.1 percent of SIKA’s capital with 52.4 percent in voting rights. The wording of SIKA’s opt-out clause means Saint-Gobain does not have to reimburse or buy the remaining shares to gain a controlling voting interest in the company. SIKA’s board, its current management and some investors are attempting to stave off the bid by Saint-Gobain.

In response to the proposed deal, SIKA AG’s board has been restricting the voting rights of SWH to 5 percent of all registered shares. This has limited the company’s voting power during SIKA’s annual general meeting and recent extraordinary shareholders meeting. The restriction in voting power at the extraordinary meeting thwarted the Burkard family-owned company’s attempt to remove the board chairman and several board members.

“The FAC noted that the opt-out clause set forth in the articles of association of SIKA AG is not open to interpretation and the acquisition of Schenker-Winkler Holding, and therefore of the SIKA brands and bearer shared by Saint-Gobain, are not subject to a bid obligation,” according to a statement released by the FAC. “With this judgment, the FAC confirms the decision made by the Swiss Financial Market Supervisory Authority’s (FINMA) Takeover Committee.”

The judgement is final is may not be appealed before the Swiss Federal Supreme Court, according to FAC.

“Saint-Gobain welcomes the final appeal ruling handed down by the Federal Administrative Court, confirming the validity of the opt-out clause in SIKA’s by-laws and expressing no reservations about its application to Saint-Gobain’s acquisition of all shares of SWH,” according a statement from Saint-Gobain. “This is the fifth decision by a competent authority confirming this validity, following the decisions handed down by the Swiss Takeover Board (TOB) and FINMA earlier this year. Once again, another key argument put forward by SIKA’s board of directors has collapsed.”

SIKA management, meanwhile, acknowledged the latest decision in a statement released by the company, but the board of directors show no signs of lifting SWH’s voting restriction. Saint-Gobain’s deal hinges on majority voting power.

“With this decision the Federal Administrative Court confirmed FINMA’s decision pursuant to which the opting-out clause, according to article 5 of Sika AG’s articles of association, is applicable to the proposed acquisition of Schenker-Winkler Holding AG by Saint-Gobain and Saint-Gobain is not obliged to submit a public tender offer to all shareholders of Sika AG,” according to SIKA’s statement. “SIKA itself did not appeal the FINMA decision and was not a party to the proceedings before the Federal Administrative Court.

“The now completed takeover proceedings only concern the issue of the opting-out and do not concern the issue of whether article 4 of the articles of association also applies to the indirect sale of the Sika stake by the family Burkard,” according to SIKA’s statement. “This latter issue is at the core of the civil proceedings pending in Zug.”

SIKA chairman Paul Hälg says that the “Key legal issue was not the opting-out clause but whether the voting rights tied to the stake could be limited to 5 percent at shareholder meetings,” according to a local report.

“We are very confident that the ill-founded restriction of the voting rights applied by SIKA’s board of directors at the last two general assemblies will also be declared illegal,” says Urs Burkard, representative of the SIKA founding family, according to the report.

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