AKZOY Akzo Nobel NV (QX)

By Christopher Alessi, Austen Hufford and Andrew Tangel 

Paint giant PPG Industries Inc. on Monday raised its offer for Dutch rival Akzo Nobel NV to EUR24.6 billion ($26.4 billion), the U.S. firm's third takeover attempt in a two-month-long, unsolicited courtship.

PPG increased its offer price for Akzo to EUR96.75 a share, up from its bid last month of EUR88.72 a share. PPG's initial approach at the start of March was at EUR83 a share.

"It's clear we're not going away," PPG Chairman and Chief Executive Michael McGarry said in an interview, calling the latest bid the company's final offer. "It's clear that the shareholders and the stakeholders will all benefit from PPG being the owner of the larger, combined company."

Akzo, whose stock was up almost 5% on Monday, confirmed it had received PPG's updated offer and would "carefully review and consider" the proposal.

PPG's latest offer comes as Akzo is warding off an effort by some of its largest investors, including activist investor Elliott Management Corp., to push the Amsterdam-based company to engage in negotiations with the Pittsburgh-based firm.

Elliott earlier this month called for a special meeting of Akzo's shareholders to try to oust the chairman of its supervisory board, who is seen as an opponent of such a deal. Akzo responded by saying it strongly supported Chairman Antony Burgmans and would reject an agenda item seeking to dismiss him. The company hasn't yet said whether it would agree to hold the extraordinary meeting.

PPG said the new 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.

Mr. McGarry said PPG has gone out of its way to assuage concerns over the acquisition, including a pledge that the combined company would be listed on stock exchanges in both New York and in Amsterdam.

"We have bent over backwards to appease them," Mr. McGarry said, adding: "There is no room left for them to raise for any further concerns. It's time for them to come to the table."

Mr. McGarry has said all options remain on the table, though he wanted to avoid a hostile bid. "We strongly prefer a negotiated deal with Akzo Nobel, and it to be done privately," he said.

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.

Mr. Büchner said the "vast majority" of net proceeds from the separation of the chemicals business would be returned to shareholders. Pretax proceeds from the move could be roughly EUR8 billion, according to analysts.

Akzo said it is targeting increased shareholder returns and plans to issue a EUR1 billion special dividend to shareholders in November, with a 50% increase on the regular dividend to EUR2.50 a share.

Speaking with The Wall Street Journal last week, Mr. Büchner said that unlike PPG's takeover proposal, his plan to separate the specialty chemicals division and create value for shareholders offers a "certainty of execution."

PPG said Monday that its most recent proposal "is vastly superior to Akzo Nobel's new stand-alone plan."

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 Dutch firm's European Union production facilities to the U.S.

"We think the revised offer will be very difficult for Akzo to reject," analysts at Bernstein Bank wrote Monday. "We think the most likely outcome is that Akzo grants PPG due diligence to enable a slightly improved offer," they said.

Write to Christopher Alessi at christopher.alessi@wsj.com, Austen Hufford at austen.hufford@wsj.com and Andrew Tangel at Andrew.Tangel@wsj.com

(END) Dow Jones Newswires

April 24, 2017 12:10 ET (16:10 GMT)

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