Expert Corporate Governance Service (ECGS)
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Etude de l'AG du 30/11/2017

Akzo Nobel previously rejected a USD 29 billion take-over bid made by market leader PPG Industries earlier this year, thereby frustrating some of its shareholders. Activist investor Elliott led an aggressive campaign to force AkzoNobel to accept the take-over bid but was thwarted by a combination of resistance from managers, local institutional investors and even politicians who feared that a merger would result in thousands of Dutch jobs being lost.
Since rejecting the last take-over bid by PPG Industries, AkzoNobel more recently announced it was in “constructive talks” to buy Philadelphia-based Axalta Coating Systems. Although AkzoNobel called it “a merger of equals,” AkzoNobel is nearly three times the size of Axalta.Swallowing Axalta would help protect AkzoNobel against a fresh advance from PPG Industries by making it too big to digest. AkzoNobel confirms that its separation of Specialty Chemicals, including the return of the vast majority of net proceeds to shareholders, remains on track for April 2018 and is unaffected by these discussions.
On 16 August 2017, Akzo Nobel announced that it had ended a struggling disagreement with its largest shareholder, Elliott Advisors, by agreeing to appoint three new directors to its board. Akzo Nobel stated it had reached an agreement as part of an effort to normalise relations with Elliott, which for months had included legal battles against the Company for its reluctance to engage in talks with US-based PPG Industries which made several takeover offers. In exchange for Akzo Nobel appointing three new members to its board, Elliott agreed to support the Company’s plan to split itself into two separate entities, as well as support the recent appointment of Thierry Vanlancker as CEO. Mr. Vanlancker succeeded Mr. Ton Büchner, who stepped down due to health reasons, as CEO of Akzo Nobel last June.
Under agenda item 1, it is proposed to appoint Mr. Maarten de Vries as Chief Financial Officer (CFO), starting January 1, 2018 for a four-year term. Akzo Nobel CFO Maëlys Castella took a leave of absence on 8 September 2017 for health reasons. Responsibilities are currently managed by the Controller of the Company, Mr. Hans De Vriese. We have no concerns over the proposed appointment of Mr. De Vries and recommend approval.
Akzo Nobel furthermore proposes the nomination of two new Supervisory Board members, Mrs. Sue Clark and Mr. Patrick Thomas. In addition, it was announced that AkzoNobel intended to nominate a third new Supervisory Board member. An earlier proposal by shareholder Universities Superannuation Scheme Limited ("USS") to nominate Mr. E. Meurice for appointment as a new member of the Supervisory Board was withdrawn. Under agenda item 2, the Supervisory Board proposes to newly appoint Mr. P.W. Thomas, Mrs. S.M. Clark and Mr. M. Jaski as members of the Supervisory Board with effect from November 30, 2017 for a four-year term. We have no concerns over the proposed appointments and recommend approval.
Under agenda item 3, It is proposed to approve the separation of the Specialty Chemicals business from AkzoNobel through a private sale or a legal demerger, on conditions to be determined by the Board of Management with approval of the Supervisory Board. Although we believe the separation of the Specialty Chemicals business allows AkzoNobel to increase returns to its shareholders, we regard the shared details on the private sale or legal demerger to be insufficient for shareholders to make a well-informed decision in these turbulent times for Akzo Nobel. Therefore, we recommend shareholders oppose this proposal.

Akzo Nobel N.V.

Akzo Nobel N.V. is a holding company. Through its subsidiaries, Co. is engaged in the production and marketing of paints, coatings and specialty chemicals. Co. has three segments: Decorative Paints, which supplies products for the professional and do-it-yourself markets, including paints, lacquers and varnishes, as well as products for surface preparation; Performance Coatings, which is divided into the following businesses: Automotive and Aerospace Coatings, Industrial Coatings, Marine and Protective Coatings, and Powder Coatings; and Specialty Chemicals, which are used in products such as ice cream, soups, disinfectants, plastics, soaps, detergents, cosmetics, paper and asphalt.


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