James Hardie Industries plc has defended itself from criticism of the governance around its controversial US$8.74 billion (A$13.87 billion) scrip takeover bid for the AZEK Company, saying it would not change its listing status without shareholder approval.
The building materials company has been criticised by institutional investors for obtaining an Australian Securities Exchange (ASX) waiver from needing shareholder approval for the bid, along with the dilution of earnings and strategic rationale.
If the deal is approved James Hardie plans to move its primary stock listing from the ASX to the New York Stock Exchange (NYSE) where Australian shareholders will have less influence over the company’s direction.
James Hardie (ASX: JHX) said that following discussions with shareholders the Board confirmed the company would:
- retain an independent Chair and a majority of independent directors
- continue to align management remuneration with generation of shareholder value and hold an advisory vote on remuneration each year, and
- not seek Foreign Exempt listing status and would hold a shareholder vote before making any decision to change its ASX listing status.
In an ASX announcement, the company said its Board of Directors’ corporate governance practices aligned with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations and New York Stock Exchange corporate governance listing standards.
It said management and the Board had engaged with many shareholders to discuss the transaction, and how it would accelerate its growth strategy, enhance its financial profile and generate meaningful shareholder value.
“James Hardie Industries plc is committed to its corporate governance policies and practices, and this commitment will not change following completion of the AZEK transaction,” it said.
The Board Charter requirement that a majority of directors and the Chair be independent would not change, and it would continue to maintain key performance metrics that deliver medium to long term shareholder value.
Under the agreement, Azek shareholders will receive US$26.45 cash and 1.0340 ordinary shares of James Hardie to be listed on the NYSE for every share of AZEK common stock they own.
James Hardie shares have fallen more than 20% since the bid was announced on 24 March, closing 45 cents (1.24%) higher on Monday at A$36.83, capitalising the company at $15.83 billion.
