AkzoNobel rejects third takeover bid from PPG worth $29 mln

Robyn Ryan
May 9, 2017

Dutch paint maker Akzo Nobel AKZO.AS on Monday rejected a third takeover proposal from larger USA rival PPG Industries PPG.N , valued at 26.9 billion euros ($29.51 billion), saying it undervalues the company, faces antitrust risks, and does not address other concerns such as "cultural differences".

PPG said AkzoNobel has once again refused to enter into a negotiation regarding a combination of the two companies, ignoring the best interests of its stakeholders, including long-term shareholders who overwhelmingly support engagement.

However, some of its biggest shareholders favour a deal.

PPG now has until June 1 to decide if it wants to table a formal bid without the support of Akzo's board, effectively turning the takeover attempt hostile.

AkzoNobel says it rejected the latest offer after "considerable in-depth analysis" including talks with PPG's CEO Michael McGarry. PPG has said it has no plans to break up Akzo following an acquisition.

AkzoNobel's share price was down 2.4 percent at 77.50 euros ($84.82) late Monday morning compared to its previous close, but had edged up by 0.6 percent since the Amsterdam stock exchange opened.

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.

About 93 percent of Akzo's shareholder base is non-Dutch, as are most of its employees.

"The meeting lasted less than 90 minutes", it said of Saturday's talks.

During voting at the meeting, about a third of shareholders opposed a resolution allowing management to issue shares this year.

"Specifically, the AkzoNobel chairs stated up front that they did not have the intent or authority to negotiate", PPG said, adding Monday's decision "reflects a continued lack of proper governance" by the company's board.

PPG said it will review the full details of AkzoNobel's response.

The merger plan has raised fears that PPG would seek to cut jobs in Stowmarket, due to both sites now operating duplicate workforces.

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.

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