Akzo Nobel Rebuffs Raised $24 Billion PPG Takeover Approach -- 2nd Update
March 22 2017 - 5:50AM
Dow Jones News
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 was rebuffed, 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.
In its new proposal, PPG offered EUR56.22 in cash and 0.331 PPG
shares for each Akzo share. Its previous offer was EUR54 in cash
and 0.3 PPG shares.
Akzo said a merger would lead to a large number of disposals
because of overlaps in both geography and business lines, and would
lead to significant job cuts.
The Dutch company, whose shares dropped more than 2% in early
trading Wednesday, 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.
Akzo, which counts Dulux, Sikkens, Interpon and Eka among its
brands, is exploring the separation of its special-chemicals
division in response to 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.
The takeover tussle puts at odds two of the world's oldest
industrial companies. Akzo Nobel was created from the merger of
paint and chemicals companies in Sweden and the Netherlands that
dated back more than a century. Among them was a chemicals firm
founded by Alfred Nobel, who launched the prizes that bear his
name. After the merger in 1994, Akzo acquired two of Britain's
oldest paint and chemicals firms.
PPG, founded in 1883 as Pittsburgh Plate Glass Co., was the
first U.S. company to successfully market large sheets of glass,
until then an expensive rarity. It quickly expanded into chemicals
to secure a supply of raw materials and was an early supplier of
the automotive and aviation industries.
Write to Ian Walker at ian.walker@wsj.com and Christopher Alessi
at christopher.alessi@wsj.com
(END) Dow Jones Newswires
March 22, 2017 05:35 ET (09:35 GMT)
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