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Sika's founding family outvotes other shareholders to cap dividend
April 11, 2017 / 2:52 PM / 4 months ago

Sika's founding family outvotes other shareholders to cap dividend

BAAR, Switzerland, April 11 (Reuters) - Sika shareholders attacked the Swiss chemical company's founding family for pushing through a proposal for a smaller dividend increase -- the latest twist in a bitter takeover battle with France's Saint-Gobain.

The Burkard family's call for a dividend of 96 Swiss francs per bearer share, rather than the board's proposed 102 franc per share payout, won approval at the company's annual meeting on Tuesday thanks to the family's voting majority.

Sika Chairman Paul Haelg said the family's proposal was "highly unusual" and was in the interest only of the heirs, who want to sell their controlling stake to Saint-Gobain for 2.75 billion Swiss francs ($2.73 bln). Sika's management opposes Saint-Gobain's takeover bid.

"The fact is that under the contract between the parties Saint-Gobain is entitled to the dividend which will be deducted from the family's sale price," Haelg said, referring to the agreement the family has signed with Saint-Gobain over the stake sale.

"We regret that (the family) is proposing a lower dividend, all the more so because the difference between its proposal and ours is a mere 15 million francs, which is insignificant in comparison with our net cash of over 400 million francs."

The family says the dividend will only be deducted from the sale price if the money is removed from their investment vehicle which Saint-Gobain wants to buy to get control of Sika.

Other shareholders also criticised the family's stance.

"The dividend payout ratio suggested by the board is 46 percent, which is a sustainable figure," said Dominique Biedermann, chairman of shareholder advisory firm Ethos, which represents shareholders holding 8 percent of the stock.

"This counterproposal is stupid and I don't understand why the family are doing this. It will only anger the other shareholders more."

Urs Burkard, a family member and Sika director, said increasing the dividend from last year's 78 francs was "too much."

"The dividend should be increased in proportion to income, the increase in recent years has been out of proportion," Burkard said. "It is better to keep the money in the business."

The Burkards have battled Sika's board over their plans to sell their investment vehicle Schenker-Winkler Holding (SWH) to Saint-Gobain, which emerged in December 2014.

SWH controls Sika because its 16 percent equity stake comes with nearly 53 percent of the voting rights.

Sika's board has responded by limiting SWH's voting rights to 5 percent on matters relating to the hostile takeover, but not on issues like the dividend.

Sika's board maintained the limit on SWH's voting on board members, keeping off the family's nomination of Jacques Bischoff as a director. Haelg was also re-elected chairman.

Earlier on Tuesday, Sika forecast sales would exceed 6 billion Swiss francs this year after they rose by 9 percent in the first three months of the year.

"It is clear beyond doubt that Sika does not need Saint-Gobain in order to achieve its strategic targets for 2020," Haelg said at the AGM. ($1 = 1.0071 Swiss francs) (Reporting by John Revill; Editing by Susan Fenton)

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