By Toby Sterling
AMSTERDAM (Reuters) - Activist hedge fund Elliott Advisors has filed a second lawsuit in its attempt to oust the chairman of Dutch paints group Akzo Nobel <AKZO.AS> over his rejection of a 26.3 billion-euro ($30 billion) takeover proposal from U.S. group PPG Industries <PPG.N>.
Faced with opposition from Akzo's boards, PPG dropped its attempt to buy the maker of Dulux paints on June 1. Under Dutch securities law PPG cannot approach the company again for at least six months.
PPG's final proposed offer in cash and shares was worth more than 95 euros per Akzo share. The company's stock was trading up 0.2 percent on Friday at 77.58 per share.
In a preliminary ruling in May Amsterdam's Enterprise Chamber rejected Elliott's bid to compel Akzo to convene an extraordinary meeting of shareholders to vote on dismissing Antony Burgmans, saying it was an attempt to wrest control of the company's strategic direction from the board.. That case is continuing.
But Elliott said on Friday it had started a new action at a different venue, the Interim Relief Court, which is part of Amsterdam's District Court. The Enterprise Chamber case is expected to take months, with the next hearing scheduled for September 20, while the District Court case should be heard within several weeks. A date has not yet been set.
Elliott, which is now Akzo's largest shareholder with a 9.5 percent stake, said it had lost all confidence in Burgmans and believed it must pursue the case to defend shareholder rights under Dutch corporate governance law.
In response, Akzo Nobel's director of public and media relations Diana Abrahams said the company has been in close contact with its shareholders since the ruling in May, when the judges also told it to repair relations with its disgruntled shareholders.
"We have had more than 130 contacts with shareholders in June, seeking feedback," Abrahams said, adding that the company would put forward a plan to appease shareholders at the company's second-quarter results on July 25.
Akzo is also seeking to sell its chemicals division, representing a third of profits, in order to fund an extraordinary dividend and share buyback to placate investors.
Under Dutch law shareholders are in theory granted the right to request an extraordinary meeting of shareholders but the Enterprise Chamber ruling restricted the circumstances for exercising that right.
Elliott said on Friday that now that PPG's bid was off the table it is merely attempting to censure the company's management for poor performance, rather than seeking to change its strategic direction.
"Elliott finds Chairman Burgmans’ views on shareholder democracy to be archaic and wholly unacceptable in today’s capital markets," it said in a statement.
"A board which holds itself accountable to no one is not an appropriate governance paradigm. If shareholders are not able to regulate the conduct of Akzo Nobel's boards, who can?"
(Editing by Greg Mahlich)