AkzoNobel, the Dutch paints and coatings group, today announces it has rejected a third unsolicited, non-binding and conditional proposal from its U.S. rival PPG Industries Inc. In spite of lingering pressure from some shareholders to engage with its suitors, Akzo chooses to walk away from the $29.5 billion hostile bid.
AkzoNobel Rejects Third Takeover Bid from PPG
The Dutch paint maker revealed its rejection two weeks ago after PPG submitted a third offer in which it raised its proposed cash and share offer to $29.5 billion from $27 billion. The move was followed by Akzo rejecting two previous approaches from PPG. Consequently, it now has to face a group of disgruntled shareholders at its annual meetings. Its shareholders, including hedge fund Elliott Advisors, insist Akzo should be at least open to provisional talks with PPG to analyze the takeover bid.
PPG said its latest takeover bid represents an increased price of 96.75 euros (106 USD). The figure is fifty percent extra from AkzoNobel’s closing price of 64.42 euros on March 8, 2017. This was a day before PPG announced it had made a proposal to buy the Dutch paintmaker at 80 euros per share. The second bid worth 90 euros per share on March 20 was rejected within 2 days.
This time AkzoNobel rejected the proposal from Pittsburg-based PPG saying the bid undervalues the company, raises antitrust risks and does not address other concerns such as “cultural differences,” which would be a bad sign for employees, customers, and the shareholders.
The move has attracted criticism from shareholders, including Elliot Management Corp. and Causeway Capital Management LLC.
A week ago, Akzo rested its case for remaining independent and promised to return shareholders 1.6 billion euros in extra dividends. AkzoNobel CEO Ton Buechner has instead laid out a plan to sell or float its chemicals unit, which amounts to a third of company sales and profits, within twelve months. Both moves would make Akzo an unappealing target for PPG. Even so, PPG, the world’s largest coatings maker said the latest takeover bid is superior to Buechner’s plan. It has said the sole aim for the merger would be synergies of $750 million between the companies’ paint and coatings businesses.
According to Elliot Advisors, AkzoNobel will lose 6,400 jobs without the PPG takeover. The Dutch paintmaker plans to cut 200 million euros in costs annually in the coming years. Meanwhile, Dutch labor unions said they cannot weigh competing claims by the two companies and are willing to talk to PPD Industries.