Akzo Sits Tight in Face of PPG Bid -- WSJ
April 26 2017 - 3:03AM
Dow Jones News
By Christopher Alessi
FRANKFURT -- Dutch paints and chemicals maker Akzo Nobel NV on
Tuesday rejected a request by Elliott Management Corp. and other
investors to hold an extraordinary shareholder meeting to oust the
company's supervisory board chairman.
Akzo's dismissal of the request comes a day after paint giant
PPG Industries Inc. submitted its third bid for the Dutch company,
raising its offer to EUR24.6 billion ($26.4 billion), or EUR96.75 a
share. That is up from a sweetened bid of EUR88.72 a share last
month. PPG called the new proposal "one last invitation" for Akzo's
board to engage in talks.
Activist investor Elliott's call for an extraordinary general
meeting "does not meet the required standards under Dutch law," the
company said in a statement. The company also reiterated its full
backing of Chairman Antony Burgmans.
"The request is irresponsible, disproportionate, damaging and
not in the best interests of the company," Akzo said.
Elliott called for the EGM two weeks ago, as it was pressuring
Akzo to engage in sale talks with rival PPG. Mr. Burgmans is seen
as an obstacle to a PPG takeover of the Dutch firm.
Elliott and other investors including U.S.-based Causeway
Capital Management LLC -- Akzo's largest shareholder with about a
6.7% stake -- have been pressuring Akzo's management to negotiate
with PPG since the Pittsburgh-based company first made an initial
takeover approach of EUR83 per Akzo share at the start of
March.
"We will take a very careful look at this bid," Mr. Burgmans
said Tuesday of the latest offer, presiding over Akzo's annual
general meeting of shareholders in Amsterdam.
Elliott on Monday warned Akzo that this could be the company's
last chance to engage in "friendly discussions" with PPG,
suggesting the U.S. firm could then launch a hostile takeover.
"There can be no assurance that a hostile bid -- if one were to
materialize -- would include the same or improved protections and
undertakings for Akzo Nobel stakeholders," Elliott said in a
statement.
The latest offer appeared to address some of Akzo's concerns
over how a takeover could affect its stakeholders, including
commitments to maintain Dutch jobs and a promise not to relocate
any of the firm's European Union production facilities to the U.S.
PPG also said it would agree to a "significant reverse" breakup
fee, as well as a pledge that a future combined company would be
listed on both the New York and Amsterdam stock exchanges.
"Akzo Nobel has no more room for excuses now and must enter into
proper discussions with PPG," said a spokesman for Akzo shareholder
Columbia Threadneedle Investments.
Analysts at Evercore Partners said that if Akzo were to reject
PPG's latest offer, the U.S. company could come back with a hostile
approach by the start of June.
PPG said the most recent bid values Akzo at a premium of 24%
over its closing price of EUR78.20 a share on April 21, the last
full day of trading before the revised offer.
That was just days after Akzo unveiled the details of a new
strategy to separate its specialty chemicals unit, which is part of
Chief Executive Ton Büchner's continuing effort to ward off PPG.
Mr. Büchner has repeatedly refused to engage with PPG, calling the
first two takeover offers inadequate.
The company told investors on April 19 that it plans to pursue a
dual-track process to have the option to either spin off the
specialty chemicals business as a separate listed entity or sell it
outright, to be completed within the next 12 months.
The Dutch company first announced last month that it planned to
separate its chemicals business, when it disclosed PPG's interest,
and has said the plan would create more value for shareholders than
PPG's offer.
Write to Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
April 26, 2017 02:48 ET (06:48 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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