Global

23/05/2017

AkzoNobel shareholders seek court help to oust chairman

AMSTERDAM: AkzoNobel shareholders and a US hedge fund manager Monday urged a court to allow a vote on ousting the chairman of the world's leading paint manufacturer, seen as blocking a US takeover bid.

Activist investor Elliott Advisors, and at least seven other shareholder groups, are calling for a shareholders' meeting to be held, accusing the management of “creating a crisis of confidence” after the Dutch company rejected three takeover offers from US rival PPG.

Elliott took its case to the Dutch Enterprise Chamber in Amsterdam, asking the tribunal to order an extraordinary meeting of AkzoNobel shareholders, which could vote on whether to dismiss chairman of the board Antony Burgmans.

But the Dutch chemical giant hit back, saying axing Burgmans will “not change any decisions taken by its board of directors in relation to PPG.”

Both Burgmans and Michael McGarry, chief executive of the Pittsburg-based PPG, attended Monday's hearing.

“Shareholders are single-handedly being robbed of their right to call to account those in charge of policy, namely Burgmans,” said lawyer Jan Willem de Groot, acting for Elliott.

“There is a serious crisis of confidence between AkzoNobel and a large group of shareholders,” De Groot told the packed courtroom.

AkzoNobel, whose best-known brands include Dulux and Trimetal, earlier this month snubbed a third takeover offer by PPG – which valued the company at around €24.6 billion (RM118.99 billion).

AkzoNobel maintained the PPG bid undervalued the group and “contained significant risks and uncertainties”.

According to financial regulations, PPG now has until June 1 to submit a formal bid for AkzoNobel to the Dutch market regulator without the AkzoNobel board's support – meaning the bid could turn hostile.

The Enterprise Chamber will hand down its ruling on Monday, May 29, the presiding judge Gijs Makkink said.

Elliott, headquartered in New York, holds a stake of just over 3.0% in AkzoNobel but with other shareholders in favour of the deal with PPG, claims more than 17% representation.

'Serious' talks needed

De Groot said “the rapid way” in which AkzoNobel's board had refused the request by Elliott and other shareholders for an extraordinary meeting was “unacceptable”.

“Elliott insists that PPG's proposal must be taken seriously and that can only happen through serious negotiations with each other,” De Groot added.

McGarry told the hearing Burgmans “refused to entertain a proposal from PPG and engage with PPG, regardless of the impact to stakeholders.”

“It was and still is our preference to negotiate with Akzo, and if possible, reach an agreement,” he said.

“We are not here to give an opinion on whether Mr Burgmans should remain in his position,” McGarry's lawyer Arnold Croiset van Uchelen told the judges.

“What PPG wants is for Akzo to hold a proper discussion over the possible combination of both companies,” the lawyer said, also vehemently denying accusations of collusion between PPG and Elliott.

He told the judges that PPG was prepared to pay a 200-million-euro break-up fee should negotiations with AkzoNobel reach a dead-end.

Irresponsible

AkzoNobel, formed in 1994 from the merger of the Dutch and Swedish firms Akzo and Nobel, has said it believes there is a “significant integration risk” to a tie-up with PPG, warning the US company has provided no job guarantees for its 46,000-strong workforce.

It has also stood by Burgmans, saying his dismissal “would be irresponsible, disproportionate (and) damaging”.

Elliott's bid to remove Burgmans is an attempt “to force the management and board to change course,” said Harm-Jan de Kluiver, representing AkzoNobel.

The fund was really motivated by “short-term gain which it thinks it will get if Burgmans is fired and AkzoNobel is taken over by PPG,” De Kluiver added.

Amid the furore, Dutch authorities have said they wanted to beef up protection for large Dutch multinationals that have become targets for takeovers, with Economics Minister Henk Kamp saying he preferred AkzoNobel to remain in local hands.

Kamp said authorities were looking at extending a so-called cooling off period to one year during hostile takeover bids, enabling a company's top management to regroup and formulate a new strategy. — AFP

23/05/2017

Ford shakes up leadership amid lagging sales

WASHINGTON: Ford Motor Company shook up its top management Monday, ousting its CEO amid declining sales in major markets, pressure to ramp up technology and a flagging share price.

The company named Jim Hackett, who launched and led the high-tech division developing Ford's self-driving cars, to replace Mark Fields as president and CEO.

It also named three new executive vice presidents to oversee global markets, global operations and mobility as part of the shakeup. The appointments are effective June 1.

Executive chairman Bill Ford, great-grandson of the company's founder, said the move had been “in discussion for some time.”

The decision was not made “hastily” but after some consideration “we decided it was the right time for him to resign,” after 28 years with the company.

“This is a time of unprecedented change,” Ford said during a press conference. “And time of great change in my mind requires a transformational leader.”

He praised Hackett as a “proven transformational leader” and “visionary thinker.”

Hackett, 62, has led Ford's “smart mobility” unit, which includes autonomous vehicles and connectivity features, since March 2016. He previously led a turnaround at office furniture company Steelcase.

Noting the new trends in artificial intelligence, deep learning and robotics, Ford said there is a need to modernize the business, speed up decision-making, and “move decisively to address underperforming areas.”

Under pressure

The changes – which one analyst called “a coup from an outsider” – come at a time when Ford is under increasing pressure. Like its US competitors, Ford faces its first downturn since 2009, after several years of record sales.

The share price has lost more than a third of its value in three years and it was overtaken in April by upstart electric carmaker Tesla in terms of market capitalization.

The group's profits plunged by 38% in 2016, a trend that was confirmed in the first quarter, while costs exploded. The company recently announced it was cutting 1,400 salaried jobs in North America and Asia.

“This is a radical move we think, for two main reasons: the incumbent is being usurped by a relative outsider; and the outsider comes from the Smart Mobility division at Ford,” said Paul Moran of Northern Trust Securities.

He said such a “coup” by a turnaround specialist could be followed by similar moves by other large manufacturers.

Fields had led Ford for just three years and wanted to turn the company into a mobility services group in the hope of containing the Silicon Valley offensive in the automobile industry.

Indeed, there is a race against time pitting old-school carmakers against Alphabet (Waymo), Apple, Uber and Tesla to develop and market the autonomous car by 2020.

Despite the many investments made by Fields, and plans for an autonomous vehicle by 2021, investors prefer to bet for example on Tesla, which has technology in its DNA.

Few details

Hackett and Ford provided few specifics on their plans in the new era. The press release announcing the appointment said priorities include modernizing Ford's business “to unleash innovation, speed decision-making and improve efficiency,” including through the use of big data, artificial intelligence, advanced robotics and 3D printing.

While they both praised Fields for laying a solid foundation in his three years at the helm, Hackett said the systems he put in place were not adept at handling “complex strategy questions.”

“If you thought of strategy like a Rubik's cube, it's not just solving one side. There's lots of sides to the problem,” Hackett told the assembled analysts and reporters.

He said he has asked Ford to take some responsibilities off his plate so he can build a lean leadership team to move quickly.

Jim Farley, a former Toyota CEO who has helped Ford to return to profitability in Europe as General Motors recedes, was named executive vice president and president of global markets.

Joe Hinrichs, 50, will become executive vice president and president of global operations; and Marcy Kevorn, 57, will replace Hackett as executive vice president and president of mobility.

The ousted Fields previously led the group's operations in North America and was credited with restructuring the European operations as well as Mazda, in which Ford had a significant stake. — AFP