Dutch AkzoNobel shareholders back specialty chems separation

30 November 2017 16:25 Source:ICIS News

LONDON (ICIS)--AkzoNobel shareholders have backed the separation of its specialty chemicals business through private sale or legal demerger, the Netherlands-headquartered paints and coatings firm said on Thursday.

The carve-out was overwhelmingly backed by shareholders at an extraordinary general meeting (EGM) on Thursday and will now be pursued either through a demerger into a separate listed entity or through a private sale, according to company CEO Thierry Vanlancker.

Steps to separate the specialty chemicals business have already begun internally, a process that is expected to be complete by January 2018, ahead its anticipated  divestment by April that year.

Investors also confirmed new CFO Maarten de Vries as member of the board of management effective January 1, and the appointment of outgoing Covestro CFO Patrick Thomas as member of the supervisory board, along with former Britvic non-executive director Sue Clark and former OFFICEFIRST CEO Michiel Jaski.

The company also confirmed that a €1bn special cash dividend will be paid to shareholders on 7 December this year. Disbursement of the dividend had pushed back until after the EGM.

The separation is being carried out as a dual-track process, with preparatory steps being taken for both a demerger and a sale simultaneously.

The sale process is being carried out as a controlled auction, according to interim CFO Hans de Vriese, and binding offers are due in the first quarter of 2018.

A demerger would involve the complete separation of the business into two listed units, with AkzoNobel shareholders receiving shares in the new company on a one to one basis.

Both the specialty chemicals and paints and coatings business are expected to have investment grades once the separation is complete, De Vriese added.

The dual track process allows the company to maintain a competitive advantage in sale negotiations, according to De Vries, as prospective bidders are aware that the company can pursue an IPO for the specialties business if offer prices are not deemed favourable.

“Today marks a significant milestone in the transformation of AkzoNobel into two focused, high-performing businesses, which remains on track for April 2018,” Vanlancker said.

The appointment of the board members did not pass without controversy following the withdrawal of a proposed candidate board candidate by shareholder the Universities Superannuation Scheme (USS) last month.

A backer of the PPG takeover bid for AkzoNobel, USS, had nominated Eric Meurice, former chairman of semiconductor firm ASML, as a candidate for AkzoNobel’s board.

AkzoNobel allowed the nomination, but only as an alternative to Patrick Thomas, seen as the strongest of the three candidates for a board seat, and in response USS withdrew Meurice from the running.

Speaking at the EGM, a USS representative attacked the move to run Meurice against Thomas, stating that the decision was not the best to strengthen the board or to rebuild trust with the shareholders that thought the PPG bid was not given sufficient consideration.

“We believe that Eric would have strengthened the board and made a valuable contribution,” the USS representative said.

“This was not in our view the best way to create the best board for the company… or repair relations with shareholders,” he added, stating that USS would oppose the nominations of Clark and Jaski.

Focus article by Tom Brown

(update adds commentary, detail throughout)

By Tom Brown