Akzo Nobel rejects PPG Industries' third takeover offer

Dutch paint maker Akzo Nobel, owner of the Dulux brand, today rejected a third unsolicited takeover offer from its US rival PPG Industries, saying that the €26.9 billion ($29.51 billion) offer undervalues the company.

PPG's latest cash and share offer values Akzo's at around €96.75 per share, a 50 per cent premium to Akzo share traded before PPG's interest became known on 9 March.

Akzo Nobel's board said that the transaction will face antitrust risks, and does not address other concerns such as "cultural differences."

"The PPG proposal undervalues AkzoNobel, contains significant risks and uncertainties, makes no substantive commitments to stakeholders and demonstrates a lack of cultural understanding," CEO Ton Buechner said in a statement.

PPG has already said that it plans to submit a formal offer to the Dutch financial markets regulator by 1 June.

The Dutch public shareholding is just 8 per cent in AkzoNobel, while Anglo-American investors hold about 65 per cent, with 48 per cent held by North Americans and 17 per cent held by British.

Akzo's board will move cautiously since some of its shareholders like activist hedge fund Elliott Advisors have been urging the company to enter into talks, while also trying to oust Akzo's chairman Antony Burgmans.

Elliott Advisors, which holds a 3.25-per cent stake, had teamed up with other institutional investors like asset manager Columbia Threadneedle, Causeway Capital, Franklin Templeton, Henderson, Harris Associates and Southeastern Concentrated Value, all holding a combined more than a 10-per cent stake, to convene an extraordinary shareholders' meeting to oust chairman Antony Burgmans for refusing to enter into talks with PPG.

The Dutch economic affairs minister has opposed PPG taking over Akzo Nobel, while some of its Dutch employees are concerned that an acquisition by the US-based company would lead to job losses.

After rejecting PPG's earlier offer, the Dutch company said that it would review strategic options for the separation of its specialty chemicals business, which had revenues of €4.8 billion in 2016.

Formed in 1994 through the merger of Akzo NV of the Netherlands and Nobel Industries of Sweden, AkzoNobel is a leading coatings company whose key products include automotive coatings, specialised equipment for the car repair and transportation market and marine coatings.

AkzoNobel operates in over 80 countries, and employs approximately 46,000 people.

Its brands include Dulux, Bruguer, Tintas Coral, Hammerite, Herbol, Sico, Sikkens, International, Interpon, Casco, and Pinotex among others.

AkzoNobel is the world's second-biggest paint company with a market cap of about $17 billion and annual revenues of around $16 billion.