NETHERLANDS Law and Practice Contributed by: Maarten de Boorder, Samuel Garcia Nelen, Jelmer Kalisvaart and Bas Vletter, Greenberg Traurig, LLP
11. Activism 11.1 Shareholder Activism
their entire operations into two or more companies. Generally, it is quite difficult for shareholder activists to achieve their goals because the boards of Dutch companies do not have an overriding fiduciary duty to maximise shareholder value (see 8.1 Principal Direc- tors’ Duties and 9.4 Directors’ Duties ) and companies have defensive measures at their disposal (see 9.2 Directors’ Use of Defensive Measures and 9.3 Com- mon Defensive Measures ). In recent years, ESG and sustainability have become relevant themes for activist shareholders. This goes both ways; in some cases shareholders claim that the boards of a particular company should be more focused on ESG, while in other cases they claim that boards should be less focused on ESG. On the pro- ESG side, there is a subset of activists consisting of NGOs that are not value-driven but acquire share - holdings or start court cases to exercise influence on the company to improve their efforts to battle climate change. It is expected that the increased focus on and polarisation of ESG issues will fuel a continuing increase in shareholder (or stakeholder) activism. 11.3 Interference With Completion Although shareholders may threaten to interfere with the completion of announced transactions, they are mostly looking for an improvement in the offer terms. In public M&A transactions, it is not uncommon for existing shareholders or hedge funds that buy a stake after the announcement of the transaction to publicly express their discontent regarding the takeover plans and, in particular, the offer price. In recent years, vocal shareholders have expressed their discontent in the context of the takeover offers for several listed com - panies. This is partly because there is a high threshold to initiate squeeze-out proceedings and, consequent - ly, shareholders that have a relatively small stake can have substantial leverage in price negotiations. This is partly mitigated by agreeing to pre-wired alternative squeeze-out measures. See 6.5 Minimum Accept- ance Conditions and 6.10 Squeeze-Out Mecha- nisms .
Activist shareholders have caused quite a stir in the Dutch corporate landscape in the past two decades, during which there have been many notable cases. Recently, there has been an increase in shareholder activism throughout Europe, and in the Netherlands we see a similar trend. Over the past few years, activ - ists have acquired stakes in several companies. Generally, we see two main types of activism. The first is activism that arises in the context of a major corporate event, such as a takeover proposal. This type is mainly driven by the desire to influence strate - gic decision-making in relation to the corporate event. The second type of activism is unrelated to any major event, but rather driven by the activist’s ideas about how the company should be running or changing its business. The latter can ultimately lead to a major cor - porate event (like a merger or spin-off), but the event is not the trigger. The focus of activists in the Netherlands is typically to influence the company’s boards to change the com - pany’s strategy. This can be done to achieve several objectives, including financial engineering tactics, such as increasing dividend payouts or share buy - backs, forcing a company to sell businesses and dis - tribute the proceeds to shareholders, improve corpo - rate governance or ESG practices, or simply increase the company’s share price and sell the activists’ initial stake at a profit. 11.2 Aims of Activists The typical activist shareholders are value-driven hedge funds that look to force a change in the com - pany’s strategy. They use their nuisance value or shareholder rights to put pressure on the boards to implement measures that maximise shareholder val - ue. These funds often try to influence the strategic decision-making of a company’s boards by encour - aging them to enter into M&A transactions, such as a sale or spin-off of a business unit or to separate
914 CHAMBERS.COM
Powered by FlippingBook