Swiss Court Rules That Sika Doesn't Need to Hold EGM

By John Revill

ZURICH--A Swiss court has ruled that Sika AG (SIK.VX) isn't required to hold an extraordinary general meeting requested by its founding family, giving the chemical company a small victory in its struggle to avoid a hostile takeover by French construction giant Saint-Gobain SA (SGO.FR).

Schenker-Winkler Holding AG, an investment vehicle owned by the founding Burkard family, has sought an EGM to oust Sika board members opposed to Saint-Gobain's planned 2.75-billion-Swiss franc ($2.74 billion) takeover. Schenker-Winkler holds about 16% of Sika's stock, but nearly 53% of the company's voting rights.

The court ruled that an extraordinary meeting wasn't necessary because Sika's annual meeting is due to be held on April 14, Sika said in a statement.

The decision represents a "small, but significant step forward," a Sika company spokesman said. A spokesman for the Burkard family said the decision wasn't a surprise, and the family would continue to seek the removal of opposing board members at the AGM. The spokesman said it didn't remove the family's ability to call an EGM in the future because they own more than 10% of the share capital.

Sika has been defending itself from the planned sale since December, when the Burkard family notified the company it was selling its stake to Saint-Gobain.

The company has rebuffed efforts by Saint-Gobain to smooth relations, arguing the deal doesn't treat all shareholders fairly because it isn't extended to all investors. Sika has also said it would get lost inside a conglomerate as big as the French giant.

The court, located in the Swiss canton of Zug, hasn't yet ruled on a Sika board decision to limit the voting power of the family to 5%. The board argued that the family had formed a group with Saint-Gobain and would vote according to the French company's instructions.

The Burkards have been ordered to pay 8,000 francs in costs and 11,000 francs in compensation to Sika.