Glaverbel: Small investors turn down offer

Belgian industrialist Philippe Bodson serves as an independent director on the board of Belgian glassmaker Glaverbel SA. When Japan“s Asahi Glass Co. launched a tender on 18 March of only EUR 145 for…

Belgian industrialist Philippe Bodson serves as an independent director on the board of Belgian glassmaker Glaverbel SA. When Japan“s Asahi Glass Co. launched a tender on 18 March of only EUR 145 for each Glaverbel share, Bodson felt that he and other local investors were being cheated. The battle for Glaverbel comes at a sensitive time, when the European Union is preparing a new takeover law to be unveiled in April. EU officials say it will be designed to make takeovers fairer and more transparent, giving minority shareholders a louder voice. But resistance is strong. In Portugal, Belgium and France, governments can use so-called golden shares to prevent foreign firms from taking over recently privatized companies. Perhaps worst of all, some shares often are more powerful than others. In the Netherlands and Nordic countries, companies issue Class A and B shares, with Class A shares counting double or more for voting purposes, making it easier for families to keep control. There is a “need for a level playing field,” wrote a committee of specialists advising the European Commission on its takeover law. Without such a level playing field, minority shareholders also can lose out because, as in the Glaverbel case, buyers can offer lowball prices. Asahi Glass already controls 65% of Glaverbel. It is offering EUR 145 a share for the remaining 35%, valuing the stake at only EUR 470 million. The Japanese “took the lowest price possible because they thought it would fly,” said Bodson. For the Japanese majority owners, the lowest price isn“t so low. It represents a 30% premium on Glaverbel“s share price in December. “The offer price gives shareholders a great opportunity to make a capital gain,” said Masayuki Kamiya, director of corporate planning at Asahi Glass. But the minority shareholders are using a different yardstick. Based on 2001 consensus estimates, they point out that the EUR 145-per-share price values Glaverbel at only seven times earnings per share. British glass company Pilkington Plc trades at around 10 times earnings. Glaverbel“s board appointed Belgian investment bank Petercam to make an independent estimate. It put the Japanese offer at the bottom end of the fair price range between EUR 145 and EUR 170. Bodson, two other independent directors and chief Executive Luc Willame voted against Asahi Glass. But the six Japanese board members overruled them. Respecting minority shareholder rights is crucial in Europe because cross-shareholdings are common. The commission“s new draft takeover law will lay down guidelines on “squeeze-out” and “sell-out” rights. Squeeze-out happens when a majority shareholder wields his position to force minority shareholders to cede their shares. Sell-outs compel majority holders to buy minority shares at a reasonable price. At present, no common rules exist for either procedure. Bodson owns 5,200 shares and fears forfeiting more than EUR 100,000 by accepting the low Japanese offer. But at the same time, he says he has little choice except to sell. The Japanese are under no obligation to raise their offer and he could be left holding Glaverbel shares no one wants to buy. That isn“t a role any minority shareholder likes to find himself in.