Dutch corporate takeover defences tough to breach

THE HAGUE: Corporate takeovers can be tricky in the Netherlands, as US food giant Kraft Heinz found out before performing a sudden U-turn in its surprise move on Unilever, experts say.

But even unwanted attention from a potential predator can be useful, if it serves as a wake-up call for companies needing to shape up to avoid becoming a target again, they say.

Kraft Heinz on Sunday announced it was dropping its US$ 143 billion (135 billion euro) offer to buy the Anglo- Dutch Unilever – barely two days after vowing to press ahead with the bid that would have created the world’s second-largest food giant behind Nestle. Rotterdam-based Unilever had on Friday snubbed the offer, saying it “fundamentally undervalues” the company that has brands like Marmite, Magnum ice cream, Lipton tea and Knorr soups in its portfolio.

“We don’t really know what happened behind the scenes” between Friday and Sunday, said Peter Roosenboom, professor in corporate finance at Rotterdam’s Erasmus University.

“I think they ( Kraft Heinz) thought they could do a friendly deal...but they made a mistake.

“Historically Dutch companies make use of many takeover defences,” he told AFP.

Although many Dutch protective measures have been dismantled over the past 10 to 15 years “it still remains very difficult to acquire Dutch-listed companies in a hostile way”, Roosenboom said.

Kraft Heinz may have decided to drop the bid once it saw things sliding towards a hostile takeover and realised “it was going to be an uphill battle to get the deal done”, he said.

Analysts say Dutch corporations are protected by a unique set of laws and anti-takeover measures that makes it very difficult, but not impossible, for outside companies to conclude hostile takeovers.

Dutch companies by law must themselves consider whether the deal is in the interest of all stakeholders including management and employees, customers, creditors, suppliers and the environment.

This model differs from that used in the United States or Britain “where a board only has a responsibility towards its shareholders”, said Martijn Kesler, a corporate lawyer for AMS Advocates in Amsterdam. — AFP