AkzoNobel rejects third takeover offer from PPG Industries

AkzoNobel has rejected a third unsolicited takeover offer from US rival PPG Industries.

The offer, which was received on 24 April, was sweetened to €96.75 per share, up €6.75 from the second offer. This was made up of €61.50 in cash and 0.357 in shares of PPG common stock.

However, the Dulux owner said on Monday that the latest offer undervalues the company and does not include an appropriate change of control premium, which needs to be based on a valuation reflecting AkzoNobel’s strategy, including the recently announced plans to separate Specialty Chemicals and accelerate growth in Paints and Coatings.

The company said it has concluded that its own strategy, presented on 19 April, offers a superior route to growth and long-term value creation and is in the best interests of shareholders and all other stakeholders.

Chief executive officer Ton Buchner said: "The PPG proposal undervalues AkzoNobel, contains significant risks and uncertainties, makes no substantive commitments to stakeholders and demonstrates a lack of cultural understanding.

"By contrast, AkzoNobel has outlined a compelling strategy to accelerate growth and value creation which we believe will deliver significant long-term value for our shareholders and all other stakeholders. We will deliver this within a clear timeline, without the substantial level of risks and uncertainties attached to the alternative proposal.

"We have a strong track record of delivering on our commitments and are fully focused on accelerating growth momentum and enhanced profitability with the creation of two focused, high-performing businesses – Paints and Coatings and Specialty Chemicals – which will lead to a step change in growth and long-term value creation for shareholders and all other stakeholders.”

Akzo's own strategy includes increased shareholders returns, such as a 50% higher dividend for 2017 and €1bn special cash dividend payable in November.

Last week, Elliott Advisors - which owns a 3% stake in AkzoNobel and has been eager for the company to engage in talks with PPG - said it could lose up to 6,400 jobs if it remains a standalone company rather than combining with the US chemicals manufacturer. Elliott said it had commissioned third-party independent research which showed that over four times the number of Akzo employees could be made redundant by a standalone company.

Olivetree Financial said Akzo's rejection was "in keeping with the belief in the market of the last few days that, more than anything, Akzo was going through the motions to make it look like it was giving fair consideration".

"The market had been creeping to an opinion that it would be hard for Akzo to resist such a strong show of opinion from shareholders - clearly not the case in reality," Olivetree said, adding that the market will speculate now as to PPG's desire to go hostile.

At 1145 BST, Akzo shares were down 2.8% to €77.15.