Monday 27 May 2019

Chemical company Akzo Nobel knocks back third takeover bid

Photo: AFP/Getty Images
Photo: AFP/Getty Images

Ellen Proper

Akzo Nobel rejected PPG Industries' third takeover bid in favour of its own breakup strategy, raising the prospect that the US rival will go hostile with its $29.5bn (€27bn) offer for the Dutch coating and chemical company.

After taking two weeks to evaluate the bid, Akzo Nobel repeated that the proposal was flawed and riddled with risk, defying pressure from shareholders such as Elliott Management to negotiate. The US company, which has threatened to take the offer directly to investors, is reviewing the response, it said in a statement on Monday that swiftly followed the rebuff and a fruitless face-to-face meeting in the Netherlands on Saturday.

As a fiercely independent Dutch company meeting its aggressive US suitor at Rotterdam airport, the prospect of a breakthrough was always going to be bleak. The chat between CEO Ton Buechner and his counterpart Michael McGarry lasted less than 90 minutes, with PPG aggrieved at Akzo Nobel's unwillingness to negotiate, and the Dutch company wanting to be left alone to carry out a break-up strategy to create two companies focused on chemicals and coatings.

The company's defiance and Buechner's brief meeting with Pittsburgh-based PPG will likely rankle investors who were pushing for more substantial talks, including Causeway Capital Management. Akzo Nobel shares fell 2.8pc to €77.16 as of 12.37pm in Amsterdam, the lowest since April 3. That values the company at almost €20bn.

The extensive review and the meeting with PPG confirmed to Akzo Nobel that its own strategy is better, Akzo Nobel said in a statement. PPG's proposal also undervalues the company and doesn't include an "appropriate change of control premium". (Bloomberg)

Irish Independent

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