Dutch paintmaker AkzoNobel brushes off new takeover bid
The Hague (AFP) – The world’s leading paintmaker AkzoNobel on Monday snubbed a new takeover bid from US-based rival PPG, saying it still glossed over the Dutch company’s true value.
“The PPG proposal undervalues AkzoNobel, contains significant risks and uncertainties, makes no substantive commitments to stakeholders and demonstrates a lack of cultural understanding,” chief executive Ton Buchner in a statement.
Amsterdam-based AkzoNobel, which makes household brands such as Dulux and Trimetal, was responding to a third revised offer from PPG late last month which valued the Dutch company at about 24.6 billion euros ($27 billion).
Investors did not appear to be particularly pleased with the development, however, and AkzoNobel’s share price dropped more than three percent to below 77 euros on the Amsterdam stock exchange’s AEX index in early trade.
PPG had warned its third offer was “one last invitation” to AkzoNobel to “engage with us on creating extraordinary value and benefits for all of AkzoNobel’s stakeholders.”
The offer price was 96.75 euros per share, 6.75 euros more than in a previous bid in March.
That would have increased the value of the company from some 22.4 billion euros to 24.6 billion euros.
– ‘Not in best interests’ –
But AkzoNobel’s senior management remained unmoved, even after meeting PPG’s top bosses on Saturday.
“After extensive consideration, the company has concluded that the interests of shareholders and other stakeholders are best served by its own strategy to accelerate growth and value creation,” it said.
Formed in 1994 when Dutch Akzo merged with Swedish chemical maker Nobel, the group said the proposed takeover by PPG came with “significant integration risk,” and gave no indication as to how it would secure the relevant anti-trust clearances.
Akzo also felt that PPG “provides no commitments or evidence to support its assertion that employees of AkzoNobel will have any benefit under its ownership.”
“PPG’s failure to provide such guarantees… creates widespread anxiety and uncertainty for thousands of jobs across AkzoNobel’s 46,000-strong workforce,” it said.
CEO Buchner argued that AkzoNobel “has outlined a compelling strategy to accelerate growth and value creation which we believe will deliver significant long-term value.”
– Battle of the giants –
The new strategy unveiled last month includes plans to shed its specialist chemicals division and comes after it was buoyed by stronger-than-expected 2017 first quarter profits.
But AkzoNobel has been under pressure in the increasingly hostile battle with the Pittsburg-based PPG.
Last week, ratings agency Standard & Poor’s announced it was placing AkzoNobel on “CreditWatch with negative implications” due to “the uncertainty around the policy choices currently available to Akzo regarding future ownership, leverage, and strategic direction.”
The tussle comes just after another giant, the Anglo-Dutch Unilever, successfully fought off an unsolicited bid by the US food and consumer behemoth Kraft Heinz.
In a similar strategy to butter up shareholders, Unilever said it would sell off its margarine division to spread the profits among investors.
AzkoNobel said it plans to make 150 million euros in savings by boosting efficiency, and another 50 million euros savings from the separation of the chemicals division.