AkzoNobel under pressure from investors to engage in takeover talks with PPG Industries

24 Mar 2017

The board of Dutch paints and coatings giant AkzoNobel has come under pressure from institutional shareholders to engage in takeover talks with its US rival PPG Industries.

AkzoNobel, owner of Dulux paint brand, has already rejected two offers of €88 and €90 per share from PPG Industries and refused to enter into any discussions with the Pittsburgh-based company, which has a market cap of around $25.9 billion.

Activist investor Elliott Management has now been joined by asset manager Columbia Threadneedle, Causeway Capital, Franklin Templeton, Henderson, Harris Associates and Southeastern Concentrated Value, to force the board of AkzoNobel to start a dialogue with PPG.

AkzoNobel had this week rejected the revised unsolicited takeover offer from PPG, saying that the $22-billion bid substantially undervalued the company and was not in the interest of its shareholders (See: AkzoNobel rejects PPG's revised acquisition offer).

Rejecting the proposal on 22 March, Ton Büchner, CEO, AkzoNobel, had said in a statement, ''This proposal significantly fails to recognize the value of AkzoNobel. Our Boards do not believe it is in the best interest of AkzoNobel's stakeholders, including our shareholders, customers and employees. That is why we have rejected it unanimously.

The Dutch company also said that it would review strategic options for the separation of its specialty chemicals business, which had revenues of €4.8 billion in 2016.

In a letter to Akzo, Causeway Capital wrote, ''As long-term shareholders, we believe combining Akzo Nobel and PPG would create a stronger company, and lead to improved prospects for both shareholders and employees.''

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.