Wella’s Shareholders Seek Better Deal from P&G

Holdout shareholders in Wella AG, Procter & Gamble’s latest acquisition, stepped up their campaign for a fatter payoff Monday, claiming that P&G’s plans for the German hair care firm oblige it to offer them better terms.

P&G concluded its takeover of Wella in September after buying out family shareholders, expanding its hair-care business in Europe. P&G has said it expects the combination to yield cost savings of US$300 million (US$345 million).

But minority investors holding about 20 percent of Wella’s capital turned down P&G’s offer of euro65 (US$74.76) per preferred share, saying the 14 percent premium was insufficient. Five of them are accusing Wella’s management of neglecting their rights.

P&G said Wella will continue to be a legally independent and publicly listed stock corporation. But the five rebel investors claim P&G plans a “far-reaching integration” of Wella that, under German law, would trigger a fresh offer to minority owners.

P&G spokesman Brent Miller said the Cincinnati-based consumer goods giant has already held off a string of shareholder challenges to the deal and had “no intention” of improving its offer.

The five fund managers and investment advisers, who include Arnhold & S. Bleichroeder and Perry Capital of the United States, claim P&G’s plans for Wella oblige it to offer “suitable compensation” to minority owners — a lump sum or a share of profits.

In a statement Monday, the rebel investors said they had written to Wella chief executive Heiner Guertler demanding an extraordinary shareholders meeting to air their grievances.

They also proposed a vote of no-confidence in Guertler as well as an investigation of Wella’s management for suspected breach of fiduciary trust.

Such a meeting “would allow us to call the management to account on a whole series of conflicts of interest,” said Simon Waxley of Elliot Associates, one of the firms complaining.

The five signatories own about 9% of Wella’s capital. But they hold mostly preferred shares which carry no voting rights. P&G said in September it had secured 98% of the voting rights.