UpdateShareholders accept ICI/Akzo Nobel deal

06 November 2007 17:07  [Source: ICIS news]

(Updates and adds detail throughout)

 

By Joseph Chang and Mark Watts

 

LONDON (ICIS news)--Akzo Nobel's acquisition of coatings rival ICI will almost certainly go ahead after shareholders in the UK paints company approved the deal on Tuesday with a 99% majority.

 

The only hurdle remaining is approval from the EU competition authorities, which was widely seen as a foregone conclusion.

 

According to ICI, shareholders representing 99.39% of the company's shares voted for the acquisition.

 

Akzo Nobel shareholders approved the £8bn ($16.7bn/€11.5bn) deal at the company's EGM on Monday with a 78.65% majority.

 

The Netherlands-based company announced the acquisition on 13 August in a deal that would include Germany’s Henkel paying £2.7m to acquire ICI’s adhesives and electronic materials businesses.

 

Despite the vast majority of ICI's shareholders voting in favour, some voiced their objection to the company's takeover at its EGM meeting.

 

“This deal is not in the best interests of ICI shareholders, Akzo Nobel or the nation,” said Martin Simons, a long-time former employee and current shareholder.

 

"Akzo needs to sort its paints business out before it merges with ICI," he added, saying the Dutch company’s profit margins in paints were weaker than both ICI and rival Sherwin Williams.

 

Simons also said he thought ICI could have received a better price.

 

In response, ICI chairman Peter Ellwood pointed out that the price Akzo Nobel was paying represented a multiple of 14.2 times EBITDA - much higher than the 10.5multitple PPG was paying for SigmaKalon.

 

These included strengthening the portfolio in the GDP-linked decorative coating sector, greater ability to run the combined businesses more efficiently, the group’s operating margin target and the potential for a re-rating of Akzo Nobel's shares.

 

The takeover was expected to close on 2 January 2008.

 

The deal’s completion still requires the go-ahead from EU competition authorities but Akzo Nobel CEO Hans Wijers said on Monday it was not likely to affect proceedings.

 

Akzo Nobel expects €350m in synergies after the takeover and benefits including an improvement in the group’s operating margin target.

 

Ratings agency Standard & Poor's said it planned to raise the long-term rating on ICI by two notches, in line with the ratings on Akzo Nobel following completion of the deal.

 

($1 = €0.69/£0.48)

 

By: Joseph Chang
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