Sika: and so to court

The Burkard family has a nerve. They want to sell their 16 per cent stake in Sika, the Swiss coatings and adhesives maker to France's Saint-Gobain for SFr2.75bn - a great fat premium. Fair enough. But their stake, held through a holding company, carries 52 per cent of Sika's voting rights. They are, in effect, selling the company. The premium for the proletarian public investors with 84 per cent of the shares? Null, or possibly zero - if the deal does not stultify in a Swiss court.

Conveniently for Saint-Gobain, Sika's articles of association state that a buyer of more than a third of its voting rights is not obliged to buy out the other shareholders. Sika's board says this provision was granted to the family. Sika treats their holding company SWH's signature of a deal with Saint-Gobain as a change of ownership and wants to limit its voting rights. The family disagrees. It contends that SWH will remain a shareholder in Sika since Saint-Gobain is buying SWH. No change of ownership has happened yet.

SWH defeated an attempt at this week's annual shareholder meeting to remove the clause releasing Saint-Gobain from making a full offer. For its part, SWH tried to replace Sika chairman Paul Halg and two board members to ease its deal through. But the board blocked it by restricting SWH's voting rights to 5 per cent. SWH says this is illegal. A court must decide whether that restriction was legal.

In spite of the drama, Saint-Gobain, a company with double voting rights itself, is still committed, even if other Sika investors and managers could be a tricky to live with after the acquisition.

Sika's board and investors fret that control is being snatched from under their noses without so much as an offer, let alone a premium. Mr Halg and investors can talk up Sika's stand-alone case, bemoan value destruction, sow fear about the cuts Saint-Gobain will need to make to defray the price paid (Saint-Gobain says there will be no job cuts) and question the industrial logic all they like. But the court will note that the board and investors have gone along with the feudal voting structure for years.

This spat could drag on for years as Sika investors, short changed by the family they trusted, try to block a deal that denies them equal treatment. If the Burkards and Saint-Gobain pull off their deal, it will set an awful precedent for companies with two-speed voting structures. But they will have done it because the rules let them.

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