AkzoNobel chairman to step down in wake of pressure from Elliott Advisors
Dutch paint maker AkzoNobel has posted disappointing second-quarter core earnings and revealed that its embattled chairman, Antony Burgmans, is to step down following activist pressure.
The Dulux owner said earnings before interest and tax came in at 461 million euros (£412 million) in the period, down 30 million euros (£27 million) on a year earlier and missing analysts' forecasts.
The group blamed this on weak demand in a number of its markets coupled with higher raw material costs.
This leaves core earnings for the first half of 2017 up by just 1%, while revenue was up 4%.
However, the company, which rejected a multibillion-euro takeover bid by US rival PPG Industries earlier this year, reiterated its confidence in better full-year results, saying it still expected core earnings for 2017 to be around 100 million euros (£90 million) higher than the previous year.
Akzo's refusal to entertain talks with PPG came despite intense pressure from shareholders led by activist investment firm Elliott Advisors, which had been pushing for a deal.
Elliott has made repeated efforts to oust chairman Antony Burgmans over the way he handled the 27 billion euros (£24 billion) takeover bid.
These efforts were stepped up earlier this month, when the private investment fund filed a joint petition to the Dutch Interim Relief Court in hopes of forcing Akzo to hold an extraordinary meeting where investors would have a chance to vote on Mr Burgmans' future.
In a statement today, Mr Burgmans said he would resign when his current term ends in April 2018.
"Barring any exceptional circumstances, I intend to retire as planned and in-line with the Dutch corporate governance code from my position as chairman of the supervisory board of AkzoNobel, following the completion of my third term in office in April 2018," Mr Burgmans said.
"A process is now underway to identify my successor," he added.
It follows the sudden resignation of Akzo's chief executive Tom Buchner last week for health reasons, with chemicals division head Thierry Vanlancker to step into the role.
The group said that it would be holding an extraordinary general meeting on September 8 to vote on Mr Vanlancker's appointment and seek approval for the spin-off of its special chemicals division.
It added there would be time set aside to explain its reasons for rebuffing the offer from PPG.
Akzo also acknowledged the need to improve shareholder relations, saying it had created a new supervisory board committee to this effect, overseen by a team of advisors from JP Morgan Cazenove.
"AkzoNobel values its relationship with shareholders and takes its responsibility towards them very seriously," Mr Burgmans said.
"In recent months this relationship, with a particular group of shareholders, has been impacted by events surrounding the Company.
"We have actively reached out to our shareholders to create a plan to strengthen our relationship."
A spokesman for Elliott Advisors criticised Akzo's statement, saying the group has "chosen yet again to flout fundamental shareholder rights by deliberately precluding shareholders from adding items to the EGM agenda".
The spokesman added: "AkzoNobel should commit to adding to the September 8 EGM agenda the resolution requisitioned on April 10 for a vote on the removal from the AkzoNobel supervisory board of chairman Burgmans.
"Elliott would remind AkzoNobel that shareholders are not easily fooled, neither by blatant circumvention of the law nor by empty claims of active shareholder outreach."