Akzo Nobel investors back call for talks with PPG
Groups holding 25% of share capital press company to meet US rival over €22.4bn bid
Investors representing almost 25 per cent of Akzo Nobel’s share capital want the Dutch group to engage with US rival PPG Industries in its €22.4bn pursuit of the company, according to a survey commissioned by activist hedge fund Elliott Advisors.
Elliott, which owns more than 3 per cent of the paints and coatings company, has been among the most vocal shareholders demanding that management at Akzo Nobel sit down with PPG.
The board of Akzo Nobel dismissed two offers in three weeks, citing factors such as potential job cuts, antitrust concerns and a poor cultural fit between the two businesses.
In total, shareholders representing 24.6 per cent of Akzo Nobel’s share capital responded to the survey, which was carried out by Boudicca Proxy Consultants. Of these, nearly all — 99.6 per cent of their share capital — backed engagement between Akzo Nobel and its US suitor.
The survey came as Ton Büchner, Akzo Nobel chief executive, said that the maker of Dulux paint would unveil its own plan to boost profitability on April 19, in a bid to stave off investor discontent.
The group, which is planning to sell or float its speciality chemicals business to focus on paints and industrial coatings, said it would “outline plans for the creation of two focused businesses”, without providing further details.
Mr Büchner said that the company “was best placed to deliver” a planned restructuring despite signs of displeasure among some of its largest investors after flatly refusing two offers, including one that amounted to €88.72 per share.
Shares in Akzo Nobel traded at €77.60 on Tuesday, down 0.9 per cent. Before the bid, shares in the group traded at about €64.
“There is a large number of shareholders who are happy,” said one person familiar with the discussion between Akzo Nobel and its shareholders.
The person said that those calling for engagement had little to lose: “It is not in a shareholder’s interest to say: ‘don’t’. But there is nothing to lose by saying ‘do’.”
Some big shareholders have already gone public about their desire for Akzo Nobel to open official talks with PPG, including Causeway Capital, which owns 6.8 per cent of the company.
While Michael McGarry, PPG chief executive, has said that he would prefer not to launch a hostile bid for the Dutch group, the US boss has refused to rule out this option.
Akzo Nobel said: “We have a very active dialogue with all of our shareholders.”