April 11, 2018 / 7:01 PM / in 15 days

Ahold Delhaize rejects calls for shareholder vote on takeover defense

AMSTERDAM/LONDON (Reuters) - Dutch-Belgian supermarket group Ahold Delhaize (AD.AS) rejected calls on Wednesday for a shareholder vote on whether to retain a “poison pill” defense option against unwanted takeovers, drawing criticism from several of its investors.

At its annual meeting, the company’s boards said the defense mechanism - which is due to expire in December and gives an independent body the right to issue shares to thwart a takeover - could be extended indefinitely, and without investor approval.

Earlier Catherine Berjal, the co-founder of activist hedge fund CIAM, told Reuters that if Ahold Delhaize did not let investors decide, she would ask a judge at Amsterdam’s Enterprise Chamber to call an extraordinary shareholder meeting (EGM) to vote on the matter.

She said that while management had done a good job, there was a risk it would become complacent if it knew it was protected from potential bidders.

Ahold Delhaize’s chief legal officer, Jan Ernst de Groot, told shareholders the permission they gave in 2003 to set up the defense mechanism “knows no limitation in time. That means, the way is free for the parties to extend it.”

The company hasn’t made up its mind yet on whether to extend it, he added, but said: “we are convinced it won’t conflict with the law if we decide to extend” the arrangement.

Following the meeting, CIAM’s Berjal said: “We are disappointed at the board’s attitude and will now consider our options - all avenues to securing the best outcome for all shareholders and other stakeholders remain open.”

Berjal, whose fund holds less than 1 percent of Ahold Delhaize’s shares, said earlier she had the support of investors owning at least 10 percent of the company’s stock, and that they would pool legal costs, if necessary.

One shareholder and several board members including incoming supervisory board Chairman Jan Hommen spoke at the meeting in favor of protection against unwanted takeovers - a hot topic in the Netherlands after paints maker Akzo Nobel (AKZO.AS) fended off an unwanted bid approach from a U.S. rival last year.

However, Dutch shareholders’ association VEB, and a collection of institutional investors led by pension fund APG were more critical.

“In all the years (since 2003) you’ve misled shareholders into believing that they actually had a say in extending the option. We regret this and consider it poor governance,” the VEB’s Jasper Jansen said.

A representative for APG, who said she also represented Robeco and Dutch funds Actiam, De Goudse and MN, asked the company to call an EGM if it does decide to extend the protection, and said any extension should be limited in time.

    Additional reporting by Anthony Deutsch; Editing by Keith Weir and Mark Potter

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