Shareholders Recommended To Back Braginsky's Sulzer Bid

by Ulrika Lomas, Tax-News.com, Brussels

17 April 2001

Institutional Shareholder Services, a US company which sells voting guidance on shareholder issues to its 700 institutional clients has recommended that shareholders back René Braginsky, a Swiss corporate predator, in his bid to abolish the voting restrictions which protect Sulzer, a 167-year-old engineering company, from a hostile takeover bid.

Braginsky's company InCentive has made a SFr1.5bn ($879m) takeover bid for Sulzer but has made its bid conditional on a removal of the Sulzer board and abolition of the voting restrictions at Sulzer annual meeting, due to be held this Thursday.

InCentive is prepared to waive the conditions if it gains control, but the Financial Times says in an article today that that continuation of its bankers' support for its highly leveraged bid may be conditional on a victory at this week's meeting.

Small Swiss investors will probably back the Sulzer board, but the outcome of the vote is likely to be determined by foreign, mostly US institutional investors, some of whom normally rely on ISS advice in such situations where they have no little direct knowledge to guide them. The Financial Times thinks that 10% of Sulzer's shares may follow ISS guidance on Thursday.

ISS had originally been against InCentive's plan to reduce the size of Sulzer's board from 15 to 5, but has changed its recommendation following the news that Sulzer itself planned to reduce its board size from 10 to 6 directors. ISS said that "This reduction will mitigate our previous concerns ...and that the positive aspects of the proposal will outweigh any negative ones".

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