By Thomas Escritt (Reuters)
The legality of a poison pill anti-takeover defence used by Dutch marine engineering company Fugro will be in the spotlight at a court hearing on Tuesday in a case brought by larger rival and shareholder Boskalis.
The court ruling in the case, expected later this week, could have wider implications for other companies in the Netherlands which use such structures to protect themselves from predators.
The ruling by the court in The Hague will not set a binding precedent but will guide judges looking at future poison pill cases and could make Dutch companies more vulnerable to takeovers. Currently about two-thirds of listed Dutch companies use this type of defence.
Boskalis has built up a 20 percent stake in Fugro and has described it as a “good fit”, while also saying it was not planning a takeover offer.
But last week, Boskalis said it would seek a court ruling to dismantle one of Fugro’s defensive structures.
Fugro, which uses robots and a fleet of vessels to prospect for deep sea oil and gas deposits, has been hit hard by the oil price fall. In the second half of last year, its shares plummeted to 11 euros from 46 as oil companies cut their exploration budgets.
One of Fugro’s defences allows a foundation registered in the former Dutch colony of Curacao to issue and buy shares in some of its key assets in the event of a hostile takeover bid, which would effectively leave the hostile bidder with a much depleted company.
Fugro has said it needs this to protect sensitive client information from third parties.
Eumedion, the Dutch institutional investors association, said two thirds of listed companies in the Netherlands, including Boskalis, have similar anti-takeover protections.
Bas Steins Bischop, a law professor at Nyenrode Business University and Maastricht University, said that protections against corporate raiders or asset strippers were well regarded, but there was a reluctance to see strategic bidders blocked.
“The sentiment of industry is turning against protection measures,” he said. “Boskalis is anything but a corporate raider.”
In 2013, an independent foundation used a similar technique to thwart a bid by Carlos Slim’s America Movil for telecommunications company KPN, issuing and buying shares to give it a temporary blocking stake.
The structure Boskalis is challenging is different in that it can acquire shares in Fugro’s assets, potentially stripping the company bare and depriving it of its “crown jewels”, as the technique is commonly known.
Eumedion’s executive director Rients Abma said poison pills could have positive effects for minority shareholders. “Used properly … it can stimulate bidders to raise their bid price.” (Reporting By Thomas Escritt. Editing by Jane Merriman)