The Dutch paint and chemical business AkzoNobel rebuffed
another unsolicited take-over bid from US paint group PPG,
the third such offer in two months.
AkzoNobel, the producer of Dulux paint, instead reiterated
its intention to spin out its speciality chemicals business
into a free-standing entity, a move it said would "accelerate
growth" in its paints and coatings segments.
The €26.9bn ($29.7bn) offer, of cash and shares
equivalent to €96.75 per AkzoNobel share at time of
announcement, was an increase of some 17% from
PPG’s first offer, made back in March, and
represents a 50% premium to the AkzoNobel’s
share price before the first approach.
But AkzoNobel’s chief executive, Ton Buchner,
said the offer undervalues the company.
In particular, the company said that the offer fails to take
into account a strategy to spin out the speciality chemicals
business "to enable an acceleration of growth and enhanced
This separation of the speciality chemicals business was
announced in response to the PPG’s last bid, back
in March, and is supposed to be completed within 12 months.
The separation, which AkzoNobel has said could lead to a
separate listing of the new chemical business, is aimed at
raising capital for return to shareholders, including
activist investor shareholders who have been vocal in
endorsing the PPG bid.
Plant closure concerns
As well as raising its offer, PPG’s latest
approach had attempted to ease concerns over plant closures.
The revised offer included a pledge not to relocate
production away from Europe to the US, after AkzoNobel
previously cited concerns of plant closures as a reason to
reject the takeover.
And PPG said there would be no job losses at
AkzoNobel’s speciality chemicals plant in the
Despite this, AkzoNobel said the offer "provides limited
visibility in relation to the closing of the transaction and
subsequent integration of the two businesses".
PPG indicated that divestitures might be necessary to comply
with anti-monopolies legislation, saying it was "ready to
commit to a mutually agreed level of divestitures as may be
reasonably necessary to meet those requirements."
But the Dutch company warned that the takeover "would
require substantial and complex structural changes and be
vulnerable to regulatory-led delays," suggesting that
regulatory hurdles could take 18 months to complete.
This article from Industrial Minerals magazine
June issue was first published online on 8