{"id":131,"date":"2006-05-23T04:35:56","date_gmt":"2006-05-23T04:35:56","guid":{"rendered":"http:\/\/alephnaught.wordpress.com\/2006\/05\/23\/going-dutch-has-new-meaning-in-corporate-takeover-battles\/"},"modified":"2006-05-23T04:35:56","modified_gmt":"2006-05-23T04:35:56","slug":"going-dutch-has-new-meaning-in-corporate-takeover-battles","status":"publish","type":"post","link":"https:\/\/www.alephnaught.com\/Blog\/2006\/05\/23\/going-dutch-has-new-meaning-in-corporate-takeover-battles\/","title":{"rendered":"Going Dutch Has New Meaning In Corporate Takeover Battles"},"content":{"rendered":"
\n
A short article from the Wall Street Journal<\/a>
\non May 22, 2006 by Adam Cohen.<\/font><\/div>\n

<\/p>\n

Going Dutch Has New Meaning In
\nCorporate Takeover Battles<\/b><\/font>
By Adam
\nCohen<\/font>
May 22,
\n2006<\/font>
Page
\nA8<\/font><\/p>\n

AMSTERDAM — When Italian fashion
\nicon Gucci and Luxembourg steelmaker Arcelor SA faced hostile takeover bids,
\nboth turned to the same place for their defense — the
\nNetherlands.<\/font><\/p>\n

Unlike other European
\njurisdictions, the Netherlands allows companies to create a foundation, called a
\nstichting in Dutch, that holds shares with special voting rights or shelters
\nassets from corporate predators. Some of the country’s lawmakers and lawyers
\nfear these foundations, like Amsterdam’s brothels and marijuana shops, are a
\nfeature of a permissive society that persists for the pleasure of
\nforeigners.<\/font><\/p>\n

“Anyone can come here, find
\na notary, and — boom — in 10 minutes you have a stichting,” said Judge Huub
\nWillems, who heads the Enterprise Chamber of the Amsterdam Court of Appeals,
\nwhich hears disputes over such
\nmoves.<\/font><\/p>\n

Arcelor formed the Strategic
\nSteel Stichting in the Netherlands early last month to keep its Canadian unit,
\nDofasco — and perhaps itself — out of Mittal Steel Co.’s reach. Mittal wants
\nto sell Dofasco to avoid antitrust problems and raise cash for its Arcelor
\nbuyout, for which it increased its offer to ?23.3 billion ($29.76 billion)
\nFriday. But the stichting’s bylaws block the sale of Dofasco for five years.
\nEven if the strategy doesn’t block a takeover, it may prove a thorn in Mittal’s
\nside.<\/font><\/p>\n

European Union officials are
\nworried about such defensive tactics and have spent almost two decades trying to
\neliminate obstacles to consolidation in the 25-nation bloc. But on Saturday, a
\nnew EU takeover law took effect that allows stichtings and other defensive
\nmeasures to continue, because EU member countries had balked at losing the
\nability to protect their companies. A clause that would have prohibited
\n“frustrating action” wasn’t included in the final version. Under the new law,
\nfor instance, the buyer of a German company needs to consult the company’s
\nemployees before a deal can be final. In Sweden and Denmark, bidders still will
\nhave to contend with special voting rights that let shareholders control a
\ncompany without holding the majority of the capital. And the stichting still
\nwill be allowed in the Netherlands.<\/font><\/p>\n

A
\nstichting can house charities and other nonprofit groups, but it also has a long
\ntradition as a protectionist device. In 1907, Royal Dutch\/Shell Group first
\nestablished a defensive stichting, giving the company’s board enhanced voting
\npowers to counter unwanted buyers. The mind-set of that era was to keep out
\n“bloody foreigners,” according to Paul Storm, a lawyer with the law firm
\nNautaDutilh in Rotterdam. Over the past decade, Dutch resistance to foreign
\nownership has waned. Instead, foreigners are adopting the stichting. In 1997,
\nwhen the luxury-goods business was consolidating, Gucci hired Scott Simpson, a
\nlawyer at Skadden, Arps, Slate, Meagher & Flom in London, to design a
\ndefense strategy.<\/font><\/p>\n

A specialist in
\nhostile takeovers, Mr. Simpson has been involved in some of the Continent’s
\nlargest deals, including Vodafone-Mannesmann and Sanofi-Aventis. Mr. Simpson
\nteamed up with Martin van Olffen, a lawyer at De Brauw Blackstone Westbroek in
\nAmsterdam. When French luxury group LVMH Mo\u00c2\u2018t Hennessy Louis Vuitton SA
\nbuilt a 34% stake in Gucci, the company issued a matching number of shares to
\nthe stichting to dilute LVMH’s stake.<\/font>
Gucci
\nagreed in 2001 to be sold to LVMH’s rival PPR SA. Since then, Mr. Simpson and
\nother lawyers have wielded the stichting to fight other takeovers. “When I saw
\nthat Mittal wanted to force the sale of Dofasco, that’s when I first thought of
\nthe stichting,” he said. Mittal says its bid for Arcelor doesn’t hinge on the
\nsale of Dofasco. But in a nod to future troubles the stichting could create for
\nMittal, U.S. antitrust regulators cleared the company’s takeover bid with a
\ncondition that Mittal sell Dofasco or “alternative
\nassets.”<\/font><\/p>\n

The stichting’s statutes could
\ncreate a situation where a significant part of the world’s largest steelmaker —
\nDofasco — is controlled by a hostile three-member board. Two stichting board
\nmembers are Arcelor General Counsel Federik Van Bladel and former Arcelor board
\nmember Robert Hudry. Mittal’s lawyers are considering ways to unwind the
\nstichting. Arcelor says it also has other defensive options.<\/font><\/div>\n<\/div>\n

\n
\nTranslate<\/span><\/a>\"\"\n<\/div>\n","protected":false},"excerpt":{"rendered":"

A short article from the Wall Street Journal on May 22, 2006 by Adam Cohen. Translate<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[10],"tags":[],"class_list":["post-131","post","type-post","status-publish","format-standard","hentry","category-the-netherlands"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t