Timing of rejected PPG Akzo bid created an uproar in Netherlands – Akzo CEO

LONDON (ICIS)–AkzoNobel on Wednesday rejected a second unsolicited takeover bid made by US-based PPG Industries and expressed its concerns about how the US-based company approached the offer.

AkzoNobel CEO Ton Buchner cited a “significant culture gap” between the two companies.

He was particularly critical of the timing of PPG’s bid, saying: “The proposal came in the midst of the Dutch election and caused a lot of disturbance on the ground. It created quite an uproar.”

Other concerns expressed by Buchner included the possibility of significant job losses due to antitrust regulations and synergy issues as well as the fact that the second offer did not address any of the concerns expressed by shareholders, with the only difference being a higher price tag.

Under the revised proposal for each AkzoNobel share, the PPG was offering to pay €88.72 (adjusted for final dividend) consisting of €56.22 (adjusted for final dividend) in cash and 0.331 PPG shares, as at 20 March 2017.

However, AkzoNobel felt that, among many other concerns, the offer did not “reflect the current and future value of AkzoNobel”, it said in a statement.

“This proposal significantly fails to recognize the value of AkzoNobel. Our Boards do not believe it is in the best interest of AkzoNobel’s stakeholders, including our shareholders, customers and employees. That is why we have rejected it unanimously,” Buchner said in the statement.

Buchner reaffirmed AkzoNobel’s commitment to unlock the value of the company itself, saying:

“We are executing our plan, including the creation of two focused businesses and new cost structure, and believe this gives us a strong platform for continued profitability and long term value creation for all our stakeholders with substantially less execution risks.”

Commenting on AkzoNobel’s future plans for its specialty chemicals business, which it is currently exploring alternative ownership structures for, Buchner said that a variety of options were being examined but confirmed a decision is yet to be made.

Jeremy Redenius of financial analyst Bernstein believes that PPG’s bid may have undershot, saying that it “falls well short of the €95 per share that Akzo’s share investors are looking for.”

“We think PPG knew they need a second bid in the €90s to get engagement from Akzo and elected to not be aggressive enough, which calls into question their desire to return with a yet higher offer.”

After PPG’s initial bid was rejected by AkzoNobel on 9 March, Bernstein said that it “could see the merit of a tie-up with PPG,” and added that AkzoNobel is now “under greater pressure to perform”.

AkzoNobel shares were down by 3.7%  in morning trading against yesterday’s close, with shares valued at €74.15 as of 11:30am UK time.

Additional reporting by Tahir Ikram

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