Investors have accused the Dutch economics affairs minister of pursuing a protectionist and harmful economic agenda by pushing ahead with plans to block foreign takeover bids despite widespread shareholder resistance to the proposals.
Henk Kamp, in post since 2012, last week sent a letter to parliamentarians outlining several options under consideration that would hinder the ability of foreign companies to pursue takeover bids in the country.
Mr Kamp has pressed ahead with exploring how to block hostile takeover bids for prized Dutch companies despite receiving letters in May from several large asset managers, including Schroders, Aberdeen, Franklin Templeton and Jupiter, urging him to drop these plans.
The fund managers’ biggest fear is the possibility of new rules that would enable a company to trigger a one-year “time out” period following a takeover attempt or after coming under pressure from an activist investor. During this period shareholders would be blocked from sacking or electing board members, voting on a company’s pay policy and approving or rejecting M&A bids.
An influential Dutch investor, speaking on condition of anonymity, said: “The legislation ideas are getting more surreal by the day. The politicians want to put up barriers. It is horrible. I am feeling ashamed as a Dutchman. Calling for a time out period of one year is just outrageous.”
The July letter has angered other large investors, who had hoped existing EU rules on cross-border takeovers would prevent the Netherlands from introducing a one-year time out period. The letter outlines a new idea of introducing a one-year time out period after a takeover has been agreed, which may be legally viable, according to a Hague-based lawyer, who requested anonymity. This would not block the takeover from taking place, but it would make Dutch companies less attractive to potential buyers.
Niels Vemmers, public affairs director at VEB, the Dutch shareholders’ association, said: “We would be the only country in the world with such a regulation. That would put us really behind other financial markets. We don’t think it is a good idea. We do not support any proposals where shareholders cannot exercise their rights, particularly because this would impact the Dutch economy.”
A large UK investor, speaking on condition of anonymity, added: “This feels incredibly retrograde and it is genuinely bad for the market. Boards should not be able to hold up a takeover process for spurious reasons. It feels like a knee-jerk political reaction with no real winners.”
A spokesperson for Mr Kamp, whose own party — the centre-right VDD — opposes these measures, said the proposals had not been finalised and would be discussed with a number of stakeholders.
The minister said in a separate letter to parliament in June that hostile takeovers “may lead to the loss of [research and development] activities, head offices, and the ability to provide solutions to the challenges in society. They can also serve to weaken the Dutch innovation ecosystem or even lead to risks to national security.” The one-year time out period would provide a company’s board “with time and space to act in the event of a hostile takeover bid”, he said at the time.
Foreign takeovers of Dutch companies have become a heated political issue after Dutch paintmaker Akzo Nobel successfully resisted a three-month hostile takeover attempt by US rival PPG earlier this year. Anglo-Dutch consumer goods giant Unilever also fended off a takeover bid from US conglomerate Kraft Heinz in February.
Despite the opposition from the investor community, there is political momentum behind some kind of takeover restrictions. Last week two-thirds of Dutch parliamentarians voted in favour of introducing legislation that would give protective measures to domestic companies, particularly those in vital industries such as infrastructure, IT, telecoms and defence.
Aukje de Vries, a Dutch MP who is also a member of the VDD, the largest party in parliament, said of the proposed time out period: “We are against the idea, because we fear the negative consequences for our investment climate. It will be less attractive to invest in our companies. That’s simply bad for the Netherlands and for Dutch jobs.”
Rients Abma, executive director of Eumedion, an organisation that counts many of the world’s largest investors among its members, including Dutch pension schemes ABP and PGGM and BlackRock, the world’s largest asset manager, added: “We have a lot of concerns about the proposals. The proposed time out period would disenfranchise shareholders, including long-term engaged and responsible shareholders.”