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Stork verdict wins all-round approval

THE NETHERLANDS - All parties involved in the dispute between industrial conglomerate Stork and the hedge funds Centaurus and Paulson have indicated to be satisfied for now with the decision of the Amsterdam court of justice.

The court granted the hedge funds' request to dismiss Stork's protective measures - it had issued preferential shares - as part of its refusal to give into the funds' demand of a split-up of the company. It however rejected a vote on the dismissal of the supervisory board during the company's extraordinary shareholders' meeting.

In addition, the court decided to appoint three extra members at the supervisory board, and to establish an inquiry into how the dialogue between Stork and its main shareholders has gone wrong. Centaurus and Paulson own 30% of Stork's shares.

"It is a sensible verdict, because it opens the door to dialogue. The hedge funds must now convince the other shareholders of the need of a change. And it's clear that the executive board is primarily responsible for the development and timing of the strategy," Ronald Florisson of asset manager Robeco commented.

As a shareholder, Robeco had explicitly voiced support for the strategy of Stork's board and management. "We are also satisfied with this balanced verdict," ABP's spokesman Michel Meijs said. The €209bn civil service scheme, which doesn't own shares in the company, had also put its weight behind Stork, because of the principle  the case the case represented.

Florisson however stressed that the problem of share-blocking for voting shareholders must be solved soon. "This prevents many other investors from voting, and leads to disproportionate power for both hedge funds," he said.

"The verdict is very balanced, and also provides important rules for the relationship between a company's board and its shareholders. Protective measures are only allowed to create space for clarifying intentions," the executive director of corporate governance platform Eumedion, Rients Abma, commented.

"This case indicates the importance of the implementation of European legislation, which make a public offer for all shares mandatory, if shareholders own a certain amount of shares. The Dutch government has proposed a limit of 30%, which will be relevant to all future cases," Abma added.

The hedge funds Centaurus and Paulson also appeared to be content with the court decision. "That the court has dismissed the poison pill of preferential shares, is a victory for all Dutch shareholders," they said in a brief statement.

"The verdict is good for Stork, because it brings the company on smooth water," Stork's CEO Sjoerd Vollebregt said. "The court says that the hedge funds can't force the company to a radical change of its strategy for the time being."

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