AKZA Akzo Nobel NV

By Ian Walker in London and Christopher Alessi in Frankfurt 

Dutch paint and chemicals firm Akzo Nobel NV on Wednesday said it had rejected a sweetened EUR22.37 billion ($24.19 billion) takeover proposal from rival PPG Industries Inc., digging in its heels in a trans-Atlantic standoff between the two industrial giants.

The Amsterdam-based company said PPG's revised offer worth EUR88.72 a share, which comes just weeks after its initial EUR83-a-share offer, undervalues the company and doesn't warrant engaging with its U.S. suitor.

The standoff comes amid a wave of consolidation in the chemicals industry, including a $120 billion merger of U.S. giants Dow Chemical Co. and DuPont Co. and Bayer AG's planned $57 billion takeover of Monsanto Co., as the industry contends with weak growth and overcapacity.

PPG's raised offer for Akzo consists of EUR56.22 in cash and 0.331 PPG shares a Akzo share. Its previous offer, announced and rejected earlier this month, was EUR54 in cash and 0.3 PPG shares for each Akzo share.

Akzo said a merger would lead to a large number of disposals because of the major geographical and segment overlap of both companies across decorative paints and performance coatings, and would lead to significant job cuts.

The Dutch company also cited a "culture gap" between the two firms.

"We are convinced that AkzoNobel is best placed to unlock the value within our company ourselves," Chief Executive Ton Büchner said, adding that the board is executing its plan, including the creation of two focused businesses and new cost structure.

Akzo, which counts Dulux, Sikkens, Interpon and Eka among its brands, said it was exploring separating its special-chemicals division when it disclosed PPG's initial unsolicited offer.

Since then it has emerged that activist investor Elliott Management Corp. owns a stake in Akzo and is pushing the company to engage with PPG, The Wall Street Journal has reported. Elliott has expressed concerns to Akzo management that it didn't engage with PPG and that it didn't consult the hedge fund, which owns less than 3% of Akzo -- the reporting threshold in the Netherlands.

PPG, whose brands include Pittsburgh Paints, Olympic and Glidden, said earlier this month that it continued to believe in the strategic rationale for the deal despite the initial rejection. It didn't immediately issue a response to the rejection of its second proposal.

Write to Ian Walker at ian.walker@wsj.com and Christopher Alessi at christopher.alessi@wsj.com

(END) Dow Jones Newswires

March 22, 2017 05:20 ET (09:20 GMT)

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