Court ruling casts doubt on St Gobain's takeover of Sika

A Swiss court has cast doubt on plans for France's St Gobain to take over its Swiss industrial rival Sika by refusing to intervene in a voting rights dispute between Sika's board and its largest investor.

Sika's board and management have long protested against the terms of the SFr2.75bn ($2.83bn) deal, which would see St Gobain take control of Sika by buying 16 per cent of the speciality chemicals maker from the Burkard family - heirs to Sika founder Kaspar Winkler.

The stake, which is controlled through Schenker-Winkler Holding, controls 52 per cent of Sika's voting rights. Its purchase by St. Gobain at a 78 per cent premium has been seen as hostile takeover because the French company does not intend to bid for the rest of Sika's shares.

The court on Monday refused to stop Sika's board from enacting new rules that would end the Burkard family's control by limiting the voting rights of any single shareholder to 5 per cent. The Zug-based judge rejected an appeal filed by the family.

Shares in Sika rose 6 per cent to SFr3,758 as traders speculated that the ruling would halt the takeover.

"At best for St Gobain, this means there is going to be a prolonged legal battle about what is going to happen," said one person close to Sika.

A representative for the Burkard family holding said the judge "saw no necessity to settle the voting right question ahead of the upcoming general shareholders meeting of April 14 by preventive measures".

Shares in St Gobain fell 1.9 per cent to €40.76 just after midday in Paris. The French company could not be immediately reached for comment.

The proposed takeover has been controversial since news of the family's plans to sell their stake in the 105-year-old business emerged on December 5, after the 2013 death of matriarch Franziska Burkard-Schenker. The sale is being pursued by her five children, the fourth-generation descendants of Kaspar Winkler.

The Burkard family is planning to use the company's upcoming shareholder assembly to try to vote in a new board.

The hefty premium the family has secured has proved controversial in Switzerland.

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In February, a group of more than 100 Sika managers wrote to St Gobain chief executive Pierre-Andre de Chalendar urging him to abandon the deal because it would "harm the company and cause serious damages and disadvantages to shareholders and employees".

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