The long-running clash and legal battle between AzkoNobel, the Dutch multinational paints and chemical company, and one of its largest shareholder, Elliott Advisors has come to a mutual ceasefire following what the Dutch company called "constructive dialogue".
AzkoNobel said in a statement released today that its "aim was to normalise the relationship with its shareholders."
The agreement calls for three new members to its Supervisory Board, a suspension of ongoing litigation for three months and "an alignment on the AzkoNobel strategy to fully separate Specialty Chemicals".
The conflict between the company and its majority shareholder began with the bid for the owners of Dulux brand by rival US, paints and coating group, PPG Industries in March this year.
Resistance is futile?
Elliott Advisors, the US hedge fund, which upped its stake to 3%, stepped into a rebel-like role to rid Azko of its chairman, Antony Burgmans, and raising the level of publicity.
Just a couple of weeks ago on the eve of Azko's earning announcement on 25 July, Elliott Advisors raised pointed questions in a contentious press release it said it was forced to publish because of Azko's lack of engagement.
"Elliott notes that the current status of the nominated CEO is untenable and raises significant legal and reputational risks for the Company. Any attempts by Akzo Nobel to circumvent the requirements of its constitutive documents...would exacerbate the crisis of confidence between Akzo Nobel and its shareholders, further impairing the Company's relationship with its shareholders, which the Enterprise Chamber explicitly instructed Akzo Nobel to repair."
Return to normal relations
For now, the truce means that Elliott will support the appointment of Thierry Vanlancker as a member of the Board of Management at the upcoming Extraordinary General Meeting on 8 September.
In addition, the hedge fund also support two nominees Sue Clark and Patrick Thomas and will consult on a further third nominee. Burgmans said in a statement: “I am pleased our recent constructive discussions with Elliott improved understanding between both parties."
Gordon Singer, CEO of Elliott Advisers, are cooperative and state: "We believe AkzoNobel will benefit from the addition of the Supervisory Board nominees. Today’s agreement marks an important next step in positioning AkzoNobel for success and enabling the Company to deliver compelling value to all its stakeholders."