Valeo may seek to block its biggest shareholder's right to vote at this month's annual meeting in the fight against a demand to take more than half the seats on its supervisory board and impose a strategy review.
Thierry Morin, chief executive of the French car parts maker, told the Financial Times he would use "all the means that are legal and that are adequate with corporate governance" to block eight board nominations from Pardus Capital, a US investment fund holding 13.5% of the group.
If he revokes Pardus's voting rights, Valeo would be the second French company in a month to adopt the tactic, following Eiffage's dramatic strike against its Spanish shareholders. Eiffage's move sparked serious concerns over the credibility of the French marketplace and its adherence to good governance, the report said.
Pardus, which has more than $6 billion under management, has proposed two of its own principals and six independents, including Guy Dolle, the former defender of Arcelor against Mittal Steel, for an enlarged board of 13. All but two of Valeo's 11 board seats are up for renewal.
Morin argued that the resolution was an attempt to take "creeping control" and that the presence of Pardus directors on the board would present a conflict of interest. The fund holds a 17% stake in the loss-making US car parts maker Visteon and is keen to combine at least some areas of the two businesses. Pardus founder Karim Samii, insists he is not after control of Valeo and went after the board seats only once it became clear Morin would not consider his suggestions to replace the outgoing directors, the report said. Samii said Pardus had offered to cap its stake at 20% and pledged that its two principal directors would not vote on any Visteon deal, but that Valeo had set unreasonable conditions for board representation.
They said Pardus would have to nullify their voting capacity. As long as we are on the board we wouldnt be able to vote our shares," Mr Samii said.
Pardus's board nominees may feel increasing pressure to withdraw their names. One French business figure initially proposed by Pardus has already pulled out, and Valeo is thought to be contacting other potential waverers. Morin said a full merger with Visteon presented "unbearable" risks. He added that Valeo had made two offers for Visteon's thermal division and had been refused.