Akzo Nobel Rejects PPG's Third Takeover Bid -- Update

By Christopher AlessiFeaturesDow Jones Newswires

Dutch paints-and-chemicals maker Akzo Nobel NV said Monday that it had rejected the EUR24.6 billion ($27.05 billion) takeover bid by PPG Industries Inc., the U.S. rival's third takeover offer in a two-month-long, unsolicited courtship.

Akzo said it rejected PPG's latest offer-- made in late April at EUR96.75 a share--following "considerable in-depth analysis" of the bid and a meeting with PPG management on May 6. The Dutch firm insisted its go-it-alone strategy would create greater value for shareholders.

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Pittsburgh-based PPG initiated its courtship of Akzo at the start of March, offering EUR83 a share and sweetening the bid to EUR88.72 a share by the end of the same month. Akzo has said that the bids undervalued the company and, until this past weekend, refused to sit down with PPG.

"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," Akzo said in a statement Monday.

Last month, Akzo unveiled plans to investors to separate its specialty chemicals unit, part of Chief Executive Ton Büchner's efforts to ward of a PPG takeover.

The company told investors on April 19 that it plans to pursue a dual-track process to have the option to either spin off the specialty chemicals business as a separate listed entity or sell it outright, to be completed within the next 12 months.

Mr. Büchner said the "vast majority" of net proceeds from the separation of the specialty chemicals business would be returned to shareholders. Pretax proceeds of the separation could be roughly EUR8 billion, according to analysts at Bernstein Bank.

The company told investors last month it is targeting increased shareholder returns and plans to issue a EUR1 billion special dividend to shareholders in November, as well as a 50% increase on the regular dividend, to EUR2.5 a share.

Still, Akzo has faced an onslaught of pressure from some investors, led by activist Elliott Management Corp., to engage in sale talks with PPG.

Elliott late last week unveiled research it had commissioned by chemicals consulting firm ChemQuest that alleged a potential tie-up between PPG and Akzo would result in less than a quarter of the layoffs that would be necessitated by Akzo's stand-alone strategy.

Akzo rejected the findings, saying the research "in no way reflects the reality of our plans."

Two weeks ago, Akzo's board rejected a request by Elliott and other investors to hold an extraordinary shareholder meeting to oust the company's supervisory board chairman. The company has repeatedly reiterated its support for Chairman Antony Burgmans, who has been seen as an obstacle to a deal with PPG. It hasn't yet said whether it would agree to hold an extraordinary meeting.

Both Mr. Burgmans and Mr. Büchner met with PPG Chief Executive Michael McGarry and Hugh Grant, PPG's lead independent director, on Saturday, Akzo confirmed.

Elliott had no immediate comment on Monday.

Write to Christopher Alessi at christopher.alessi@wsj.com

(END) Dow Jones Newswires

May 08, 2017 03:49 ET (07:49 GMT)