AkzoNobel rejects 3rd PPG Industries takeover bid

AkzoNobel rejects 3rd PPG Industries takeover bid

On April 24 AkzoNobel received a third bid by PPG of 26.9 billion euros (29.4 billion U.S dollars), after it had already rejected bids of 20.9 billion euros and 22.4 billion euros by PPG in March this year. Akzo had previously refused to discuss a deal with PPG.

The move opens the door to PPG walking away or making a hostile takeover bid - something the USA firm has not ruled out.

The deal would combine the world's two biggest makers of paints and coatings and PPG reckons it can achieve savings of $750 million thanks to factors such as economies of scale on production and lowering input costs.

"The extensive review and the meeting with PPG confirmed to AkzoNobel that its own strategy is better and does not contain the risks and uncertainties inherent in PPG's proposal", the group said in a statement.

The offer led to a May 6 meeting involving Akzo executive chairman Ton Büchner, Akzo supervisory board chairman Antony Burgmans, PPG CEO Michael McGarry, and PPG lead independent director and Monsanto CEO Hugh Grant.

Most analysts say Akzo's independence plan cannot match a PPG takeover in terms of financial value.

It recovered slightly, but was still down 2.8 percent to 77.16 euros a share in early afternoon trading.

"We think the shares are likely to fall to the mid-70s this morning, as the market adjusts to a lower probability of a successful transaction", Morgan Stanley said in a note. "However, much will depend on PPG's response".

More news: RGV and KRK slams Sridevi for rejecting Baahubali 2

The new strategy unveiled last month includes plans to shed its specialist chemicals division and comes after it was buoyed by stronger-than-expected 2017 first quarter profits.

Elliott has been seeking to call an extraordinary meeting of Akzo shareholders to oust the company's chairman, a move that Akzo has been resisting.

Most analysts say Akzo's independence plan can not match a PPG takeover in terms of financial value but Buechner and Burgmans have said it is hard to objectively measure other stakeholder interests.

But there is a major barrier: Like many large Dutch companies, Akzo has a "stichting" or foundation that owns "priority shares" giving it the right to appoint management.

"By contrast, AkzoNobel has outlined a compelling strategy to accelerate growth and value creation which we believe will deliver significant long-term value for our shareholders and all other stakeholders".

Akzo also felt that PPG "provides no commitments or evidence to support its assertion that employees of AkzoNobel will have any benefit under its ownership".

The Dutch economic affairs minister has openly opposed an Akzo Nobel takeover amid rising nationalist sentiment in the Netherlands and some of Dutch employees are concerned that US ownership would lead to job losses.

According to PPG spokesman, the company will respond shortly and on the other hand, Elliot Advisors has argued that the job losses would be four times greater as required by Akzo's independence plan than what it would be if PPG and Akzo were to merge.

Related Articles