AkzoNobel rejects final PPG offer

AKZONOBEL has declined PPG’s third, unsolicited takeover offer, saying its own stand-alone strategy to sell off its specialty chemicals unit is the best option for long-term value creation for shareholders.

US firm PPG offered €26.9bn (US$28.8bn) for its Dutch paint and coatings rival on 24 April, but AkzoNobel says that it has now conducted “considerable in-depth analysis” of the proposal, and has concluded that the standalone strategy does not contain the risks and uncertainties of combining the companies. These risks include complex regulatory hurdles, a significant amount of time to complete, and substantial structural changes.

“As part of our fiduciary duties we conducted an extensive review of the third proposal from PPG. This process included myself and Antony Burgmans meeting with the CEO and lead independent director of PPG to understand their proposal in more detail. The PPG proposal undervalues AkzoNobel, contains significant risks and uncertainties, makes no substantive commitments to stakeholders and demonstrates a lack of cultural understanding,” says AkzoNobel CEO Ton Büchner.

PPG, however, has quibbled with AkzoNobel’s assertion of engagement, saying that the company has refused to negotiate since the third offer. A scheduled meeting, PPG says, lasted only 90 minutes and the AkzoNobel chairs who attended said that they had neither the intent nor authority to negotiate, and shared no concerns about the proposal, nor any comparisons on value creation between the stand-alone strategy and the takeover.

PPG says that AkzoNobel’s continued rejection was “ignoring the best interests of its stakeholders”, including some of the long-term shareholders.

Many such shareholders have expressed dismay at AkzoNobel’s refusal to engage in talks with PPG. Hedge fund Elliott Advisors has now filed a petition with the Dutch Enterprise Chamber to force a shareholder vote to dismiss AkzoNobel chairman Antony Burgmans. In a statement, Elliott said that the AkzoNobel boards “continue to demonstrate a disturbing and inexplicable tendency to act in their own, self-entrenching interests and against the interests of shareholders and other stakeholders.” It says that eight out of 20 of AkzoNobel’s largest shareholders want the company to engage with talks, and that no shareholder has backed the stand-alone, separation strategy. The third proposal, it says, addresses the concerns raised by the boards, and warrants engagement.

“AkzoNobel's supervisory board, under the chairmanship of Mr Burgmans, has failed to fulfil its corporate governance duties by refusing to obtain, through constructive engagement with a credible bidder, the necessary information required to fully evaluate a bona fide proposal,” said the hedge fund in a statement.

PPG chairman and CEO Michael McGarry previously said that its third offer was its “one last invitation”, but says it will review AkzoNobel’s latest response. It maintains that its takeover is the best option for shareholders.