Competing Visions of Stork: The Role of Active Investors

Published 01 Sep 2007
Reference 5452
Topic Strategy
Region Europe
Summary

The case discusses a conflict over strategy between the Management and Supervisory Board of Stork, a Dutch diversified company active in Aerospace, Food Systems, Technical Services and Prints, and two hedge funds, Centaurus and Paulson, which since 2004 have build a sizeable stake in the company. When an announced delisting and sale to private equity buyers fails , and management announces it intention to stick to a diversified strategy, the hedge funds decide to press the issue of a focus on aerospace. In October 2006 the hedge funds succeed in getting a majority at the AGM for their proposal to focus the company on aerospace. Nevertheless management, supported by its Supervisory Board, continues to consider such a strategy as too risky, and the vote as non-binding. In what had become one of the bitterest disputes of corporate governance in Dutch history, the Entreprise Chamber of the Court of Amsterdam takes the unprecedented step to appoint three "wise men" to the Supervisory Board of Stork, with a deciding vote in matters of strategy. In the meantime, Marel, an Icelandic Food machinery company has also build up a sizeable stake, hoping to be able to improve its chances of buying the Food Systems Division of Stork.

Teaching objectives

- Help participants to gain insight into the dynamics of Hedge Funds - Explore issues of corporate governance and the role Board Members play - Explore the differnce between shareholder and stakeholder perspective on Corporate Strategy - Explore the respective role of investors, board members and managers in determining corporate strategy

Keywords
  • Hedge funds
  • Board role
  • Corporate strategy
  • Corporate governance
  • Shareholder versus stakeholder perspective
  • Corporate Governance
  • Investors, Stakeholders and Accountability
  • GPEI
  • GPEI-Case