A row between Stork and activist shareholders erupted in open warfare on Wednesday after a foundation friendly to the Dutch industrial conglomerate triggered a poison pill defence prompting furious investors to threaten legal action.
Centaurus Capital and Paulson & Co, hedge funds with a combined 31.4 per cent stake in Stork, described the move as a “flagrant misuse” of a structure they claimed was intended to fend off hostile bids. They accused Stork of trying to silence shareholders.
Stichting Stork, a legally independent foundation established by Stork nearly 30 years ago, exercised a call option on cumulative preference shares, giving it just under 50 per cent of Stork’s ordinary shares.
That is enough to neutralise the votes of other shareholders at a meeting on January 18 at which Centaurus and Paulson will call for the dismissal of the company’s supervisory board.
The funds were stung by the management’s decision not to act on an earlier non-binding vote in which 86.5 per cent of shareholders present backed Centaurus and Paulson’s proposal that Stork sell all but its aerospace business.
In a statement the foundation said it was acting “because it believes that the development, the independence and the continued existence of Stork is seriously threatened”.
Ad Timmermans, who chairs the foundation’s five-member board, said the move was “within the law”. A person familiar with the foundation said it was permitted to exercise the call option not only in the event of a hostile bid but also if it believed Stork was under attack. VEB, the Dutch shareholder association, said it broadly supported the move.
However, Centaurus and Paulson said: “This wilful determination to frustrate shareholder rights cannot go unchallenged.” The funds said they were considering legal options.
A person close to Centaurus and Paulson said: “We are long-term shareholders who have expressed a difference of opinion. We are not attacking the company.” The funds are expected to question the independence ofthe foundation and allege itoverstepped its authority, however a lawsuit would be uncharted territory.
A lawyer who has followed the affair said he expected the court to focus not on whether the foundation’s decision was right or wrong, but if it was one that any reasonable person might have been expected to make.
The development weighed on Stork shares as analysts predicted legal action would damage the company.