Akzo Nobel, the Dutch paint maker struggling to avoid a 24.6 billion euro ($26 billion) takeover by U.S. rival PPG Industries Inc <PPG.N>, on Wednesday outlined a plan to instead separate its chemicals arm and pay shareholders 1.6 billion euros in extra dividends.
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In a statement, the company said it would sell or list the division, which accounts for about a third of sales and profits, within 12 months. The plan would "generate superior, faster and more certain value creation than the alternatives and with substantially fewer risks, uncertainties and social costs," it said.
Akzo has twice rejected takeover proposals from PPG, despite encouragement from many of its shareholders to engage in merger talks.
Earlier on Wednesday, Akzo reported better than expected first quarter earnings and forecast a 100 million euro increase in operating profit for the full year.
(Reporting by Toby Sterling; Editing by Susan Fenton)