* Sika's Burkard family wants to sell to Saint-Gobain
* Sika board, minority shareholders oppose takeover
* Case highlights power of family shareholders in Swiss
* Court to rule on board's move to restrict voting rights
By John Revill
ZURICH, Oct 18One of Europe's most bitter
takeover battles is set to enter a key stage soon when a court
rules if the founding family of Swiss chemicals maker Sika
can sell control to French rival Saint-Gobain.
Investors see the ruling, due by the end of this year, as a
test of minority shareholders' rights in Switzerland.
The Sika board and minority shareholders including the Bill
& Melinda Gates Foundation Trust oppose the deal, and the case
is being watched for how courts treat Sika's Burkard family in a
country where family shareholders can often control a listed
company with just a fraction of the equity.
The takeover battle began in 2014 when Saint-Gobain offered
2.75 billion Swiss francs ($2.8 bln) to buy Schenker-Winkler
Holding (SWH), the Burkards' private vehicle which owns 16
percent of Sika
That would have enabled the French company to take control
of Sika for far less than its 11.8 billion franc market value.
But the Burkards want to sell and took the case to court after
Sika's board restricted the family's voting rights in order to
block the bid.
"Saint-Gobain wants only to acquire 16 percent of Sika's
capital but take 100 percent of the control over a rival," Sika
Chairman Paul Haelg told Reuters.
A court in Sika's home canton of Zug will rule on whether
the board has the right to limit the Burkards to 5 percent of
the near 53 percent of the voting rights they hold.
"The Sika case and its outcome are catalysts for people to
review all their exposure to companies with voting and control
distortion," said Iain Richards, head of responsible investment
at Columbia Threadneedle Investments, which holds Sika stock
worth 300 million Swiss francs.
"If the rules that were established to protect minorities
are not worth the paper they are written on, that will affect
our view of similar companies," said Richards, who also opposes
the sale of Sika, along with Fidelity International, another
The case highlights investor concerns about the power of
family shareholders in some of Switzerland's biggest companies.
At drugmaker Roche, for instance, the Hoffmann and Oeri
families control 45 percent of shareholder votes with 8.3
percent of the total investment, while watchmaker Swatch
is run by the Hayek clan and their allies with roughly 20
percent of the share capital.
Sika's board believes it got the right to restrict the
Burkards' voting rights in return for agreeing a stock split in
1993, which gave the family most of the votes despite now having
only around 16 percent of the equity.
The Burkards, now in their fourth generation after founding
Sika in 1910, insist Sika statutes do not apply to SWH. They
say the board acted illegally in restricting the voting power of
SWH and want to oust Haelg.
"It's the family's view that they should be allowed to sell
the shares with their full rights to whom they want," SWH
Chairman Max Roesle told Reuters.
Sika's CEO Jan Jenisch has threatened to quit if the deal
Lawyers see the final outcome as too close to call, and both
sides are likely to appeal against the court's verdict.
Saint-Gobain's contract to buy SWH is valid until the end of
"There have been no cases like this before in Switzerland
where the indirect transfer of shares has gone to a court," said
Frank Gerhard, a lawyer at Homburger. "We are in uncharted
The outcome could have a big effect on Sika's share price,
which plunged 22 percent on the day Saint Gobain's bid emerged
as investors believed Sika was better off independent. Analysts
expect the shares, which have since recovered following strong
financial results, to rise if Sika is successful and decline if
the family triumph.
Columbia Threadneedle's Richards said the case was not about
family companies and their particular circumstances, but about
respecting the rights of all shareholders and existing rules.
"If the shareholder rights and protections are shown to be
token and worthless, that will drive discounts in the valuations
of companies in similar situations," said Richards.
"Investors become less committed and ultimately the cost of
capital can increase," he said. "The case will either show there
is a fair and level playing field, or not."
($1 = 0.9768 Swiss francs)
(Editing by Susan Fenton)