AkzoNobel rejects PPG's $28.8 billion takeover offer

AkzoNobel rejects PPG's $28.8 billion takeover offer

Third purchase attempt thwarted, despite executives meeting to discuss merger.

Subscribe
May 10, 2017
By Robert Schoenberger
Cars/Light trucks Coatings Design Manufacturing

Cleveland, Ohio – Third time apparently wasn’t the charm. Dutch paint company AkzoNobel has rejected PPG’s third bid to buy the company, despite promises of more money and protections for workers.

The $28.8 billion bid from PPG, launched late last month, was the first that AkzoNobel’s executives and board members considered, going as far as having meetings with PPG executives and board members. Still, the result was the same.

“The PPG proposal undervalues AkzoNobel, contains significant risks and uncertainties, makes no substantive commitments to stakeholders and demonstrates a lack of cultural understanding,” said AkzoNobel CEO Ton Buchner.

With earlier rejections, Buchner said he wasn’t convinced PPG could win regulatory approval for the deal, he was concerned it would lead to job losses for employees, and cultural differences between the companies were too large, including AkzoNobel’s commitment to charitable giving in The Netherlands.

He stuck to those criticisms of the proposed deal with the latest rejection, saying AkzoNobel shareholders would benefit more from his company’s strategy of splitting specialty chemicals into a separate business from coatings.

In Pittsburgh, Pennsylvania, PPG officials responded that they still haven’t had the opportunity to discuss the deal frankly with AkzoNobel’s leaders. While PPG officials confirmed that Chairman and CEO Michael McGarry and board member Hugh Grant met on Saturday, May 6, 2017, with Buchner and AkzoNobel board member Antony Burgmans, they say very little was accomplished.

When PPG made its April 24, 2017, offer, AkzoNobel officials said they’d consider the offer, but PPG’s leaders said they heard nothing from Europe for weeks. On Thursday, May 4, 2017, PPG’s officers asked to meet to discuss the offer. Late on Friday, May 5, 2017, AkzoNobel officials agreed to meet, but only in Rotterdam by 3p.m. the following day.

”The meeting lasted less than 90 minutes, and the AkzoNobel chairs stated at the beginning that the meeting was solely for the purpose of reviewing PPG’s revised proposal. Specifically, the AkzoNobel chairs stated up front that they did not have the intent nor the authority to negotiate,” PPG officials said.

They added that AkzoNobel’s executives would not what they didn’t like about the proposal.

So the ball is back in PPG’s court. It has increased its offer price by 30% since its opening offer in March (one that was 40% higher than AkzoNobel’s stock price at the time). Company officials said they would review the latest rejection before deciding whether or not to launch another bid.

Bucher said AkzoNobel will pursue its company-split strategy, announced to counter the initial PPG bid. The company plans to separate paints and specialty chemicals within the next 12 months. To keep shareholders happy, it plans to increase dividends this year and will issue a one-time $1.1 billion dividend in November.

About the author: Robert Schoenberger is the editor of Today's Motor Vehicles and a contributor to Today's Medical Developments and Aerospace Manufacturing and DesignHe has written about the automotive industry for more than 17 years at The Plain Dealer in Cleveland, Ohio; The Courier-Journal in Louisville, Kentucky; and The Clarion-Ledger in Jackson, Mississippi.

rschoenberger@gie.net