PPG Industries Says Disappoined With AkzoNobel's Proposal Rejection

Violet Tucker
May 9, 2017

Dutch paint giant AkzoNobel confirmed it has rejected a third takeover offer from U.S. firm PPG which valued the company at €26.9bn (£22.8bn).

AkzoNobel said its executives met with PPG over the weekend, but the company has nevertheless concluded it favours its own strategy to accelerate growth and value rather than a takeover.

But AkzoNobel's senior management remained unmoved, even after meeting PPG's top bosses Michael McGarry and Hugh Grant on Saturday in Rotterdam. That's a 50 percent premium to where Akzo shares traded before PPG's interest became known on March 9.

The offer was made several days after AkzoNobel had announced plans to increase shareholder value by selling off its chemicals business, returning an estimated £1.6 billion to investors in the process.

Formed in 1994 when Dutch firm Akzo merged with Swedish chemical maker Nobel, the group said the proposed takeover by PPG came with "significant integration risk", and gave no indication as to how it would secure the relevant anti-trust clearances.

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"The company has concluded that the interests of shareholders and other stakeholders are best served by its own strategy to accelerate growth and value creation", Akzo said in a statement Monday.

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. Moreover, four Dutch provincial governments have supported the Amsterdam-based firm's rejection of the takeover bid.

However, Akzo is studying several scenarios about how to move forward, mindful that several of its shareholders want it to engage with PPG in negotiations.

Elliott Advisors, which holds a 3.25 percent stake, had joined with other institutional investors representing more than a 10 percent stake to convene an extraordinary shareholders' meeting to debate the dismissal of Chairman Antony Burgmans over the company's refusal to enter talks. But at the April meeting, Dutch shareholders cheered calls for Akzo to remain independent and jeered an Elliott representative who spoke. Akzo addressed less tangible "stakeholder" interests in more detail in its statement, saying said that PPG had not offered Akzo representatives sufficient representation on PPG's board to safeguard its interests after a potential acquisition.

Other reports by Guamnewswatch

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