Wella Rebels Threaten P&G With Court Action

05 February 2004

Rebel shareholders in German haircare group Wella are threatening to take Procter & Gamble to court after a stormy meeting this week.

The US colossus last year secured majority control of Wella, but has been prevented from integrating the firm fully into its operations by a dissident rump of investors unhappy with the deal.

These shareholders insist that the €65 ($81; €45) per share offered for their non-voting preference stock was too low. They believe the price should have been nearer the €92.25 bid for voting shares.

The two sides clashed again at an extraordinary general meeting of Wella shareholders. P&G came under fire from SdK, a major shareholders association, which accused the consumer goods titan of shamelessly exploiting the ambiguity of German law regarding offers for different kinds of share.

The US firm has tried to characterise the rebels as a group of hedge funds seeking to force a higher bid. But the deal was also attacked by Deka Investment, one of Germany's largest institutional investors and a longstanding Wella shareholder.

Deka's fund manager Trudbert Merkel claimed the takeover was "screamingly unfair" and labelled P&G's actions "grotesque". The investment group supports calls for a 'domination agreement' which would force P&G to raise its offer to secure full control.

P&G, however, has so far held firm, resisting calls to appoint a special auditor to review the takeover. The rebels plan to take this request to court next week, which could mean the row is dragged out until a ruling in March or April.

Data sourced from: Financial Times; additional content by WARC staff