By Natalia Drozdiak and Ben Dummett 

U.S. activist investor Elliott Management Corp. lost a legal battle Monday to try to remove Akzo Nobel NV's chairman, heaping pressure on PPG Industries Inc. to make a hostile bid for the rival Dutch paint and chemicals giant or abandon its monthslong takeover pursuit.

Earlier this month, Elliott took Akzo to court in the Netherlands to force Akzo to hold a special shareholder meeting on the dismissal of Antony Burgmans. Akzo, citing Dutch law, previously rejected the shareholder request for such a meeting.

Elliott claimed that Mr. Burgmans failed to "discharge his fiduciary and corporate governance duties" after the Amsterdam-based company rejected PPG's latest, sweetened offer of EUR24.6 billion ($29.49 billion) without first attempting to negotiate a deal.

Akzo, which supports Mr. Burgmans, argues its stand-alone strategy to boost dividend payouts and spin off its specialty chemicals business and return the bulk of the proceeds to shareholders will generate more value. In defending its position, the paint maker has said its actions have met the highest standards of corporate governance in the Netherlands and complied with Dutch law.

Siding with Akzo, the Dutch business court rejected Elliott's request to allow for the vote to take place. The court said Akzo had analyzed PPG's bids "seriously" and that the dismissal of the company's chairman is a matter of strategy, which is for the management and supervisory board to decide -- not the shareholders.

Elliott can appeal the decision to the Dutch Supreme Court.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com and Ben Dummett at ben.dummett@wsj.com

 

(END) Dow Jones Newswires

May 29, 2017 13:48 ET (17:48 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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