(Bloomberg Opinion) — Founders who want to list their company in Europe while retaining control usually have a shortlist of one bourse: Amsterdam.The Dutch capital’s stock exchange promises the flexibility of London with an added perk: It allows dual classes of stock in its benchmark indexes, meaning the biggest shareholders can keep control of the voting shares even as their financial interest is diluted. It’s a practice that’s helped attract Fiat Chrysler Automobiles NV, tech giant Prosus NV, drinks maker Davide Campari-Milano NV and, significantly, Altice Europe NV, which owns French carrier SFR.That’s significant, because Altice’s billionaire founder, Patrick Drahi, may be going too far in exploiting that particular attraction of the Dutch market. Last month, Drahi announced a 2.5 billion-euro ($2.9 billion) deal to buy out the half of the telecoms company that he doesn’t already own. It was an opportunistic move, given that Altice shares lost around half of their value during the pandemic from a February peak. Minority investors felt understandably short-changed. On Oct. 1, one of them, the hedge fund Lucerne Capital, addressed a letter of concern to the board. Drahi hasn’t responded publicly to the missive. Should they not receive a satisfactory response, Lucerne has left all options open, including legal avenues.As it stands, the takeover bid requires 95% approval from investors. If, as seems likely, Drahi fails to secure enough support, one option he has would be to seek a triangular merger, where Altice is folded into a holding company owned by Drahi. Such a move would allow him to buy out the minority shareholders with approval from a majority of votes, not capital — and he controls the voting shares. Such structures are not uncommon.This is where it could get interesting. Were he to attempt this kind of merger, minority shareholders such as Lucerne would have good reason to appeal to a court in Amsterdam called the Enterprise Chamber. It has a wide remit to protect the interests of all shareholders, and can, after an investigation, act quickly by suspending a director or transferring shares to a trustee, for instance, effectively blocking the deal.Typically, the court might have little reason to protect minority shareholders against the actions of the investor who controls the voting stock. After all, investors were hitching themselves to the strategic vision of the founder or controlling shareholder — and everything that comes with that, including cheaper stock. So, the argument goes, tough tomatoes, suck it up.But this situation, if it gets that far, would be a little different, because it wouldn’t pertain to strategic management decisions. It instead would look at whether minority shareholders were being cut out of Altice’s potential future value creation. This could offer scope for the Enterprise Chamber to rule against Drahi(1).That sort of ruling would have broad implications, particularly if ratified by the country’s supreme court. By highlighting the ability of a small court to impose measures unilaterally, such a precedent could make founder-CEOs think twice about listing in Amsterdam.“These cases make things real,” says Tim Stevens, a partner at the law firm Allen & Overy in Amsterdam who has no role in the transaction. “When companies want to list somewhere on the continent, and the Netherlands looks nice, whatever happens in a case like this has ramifications for that.”The Netherlands has become a haven for Silicon Valley-style founders trying to keep control of their companies. One founder pushing his luck could cast a pall over the party.(1) There is precedent for this. The Enterprise Chamber sought to block ABN Amro’s sale of La Salle to the then Bank of America in 2007, but was overturned by the Dutch Supreme Court.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe’s technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.,
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