Sika strips controlling family of voting rights

26 January 2015

Sika’s Board of directors has stripped Schenker-Winkler Holding (SWH) of its disproportionate voting rights in the company in the latest twist in the Burkard-Schenker family’s attempt to sell its stake to Saint-Gobain.

The Burkard-Schenker family owns 16.1% of Sika’s capital, but 52.4% of its voting rights through SWH. This is due to its long-standing ownership of Sika and its position as an ‘anchor shareholder.’

However, that position was soured in the eyes of the company’s management in December, when SWH announced plans to sell-up to Saint-Gobain for CHF 2.75 billion (US$ 2.8 billion). The deal would have seen the French materials giant take control of Sika without having to make an offer to shareholders owning the remaining 83.9% of the company.

Board members at Sika who are independent of SWH have questioned the industrial logic of the merger and have said they will resign en mass if the deal goes through.

Following the announcement, SWH had applied to hold an Extraordinary General Meeting (EGM) where it proposed to replace dissenting individuals on the Board and force the merger through. However, the move by the Board to reduce SWH’s voting rights to 5% means it no longer has the power to call an EGM or make this number of appointments.

In justifying this decision, a statement from Sika’s Board said, “In the view of the Board of Directors, the voting rights held by the Burkard family/SWH should be restricted to the statutory 5% limit. The Burkard family/SWH forms a group with Saint-Gobain and therefore exercises their voting rights at General Meetings in accordance with Saint-Gobain's instructions. The Federal Supreme Court has repeatedly ruled that such arrangements are an inadmissible circumvention of statutory voting rights restrictions.

“The articles of association of Sika AG provide for registered shareholders not to hold more than 5% of all registered shares. Only the Burkard family and SWH have always been exempted from this rule. This exceptional privilege is solely attributable to the Burkard family's close association with Sika, which stretches back more than a century, and its repeated public assertions of its intention to retain this close association and to protect the company against takeovers. Now that the Burkard family/SWH have formed a group with Saint-Gobain, this historical privilege must be considered lost, together with the right to convene extraordinary General Meetings.”

This view has been backed by noted corporate law expert Professor Dr Peter Nobel.

The statement from Sika’s Board added that shareholders representing more than 35% of the company’s capital support to Board’s stance and strategy.

Stinging response

In a brief statement, Saint-Gobain responded to the latest development by saying, “Saint-Gobain has taken notice of the acts of the Board of Directors of Sika. Saint-Gobain is advised by its legal counsel that these actions are clearly against all corporate law and governance principles in Switzerland.”

Whether Sika’s move is legal or not remains to be seen, but in any case, it could mean a lengthy court case now lies in the way of Saint-Gobain’s proposed acquisition.

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