Akzo Nobel’s battle with Elliott over PPG faces pivotal week
Dutch court due to rule on Monday on hedge fund’s request for special shareholder meeting
Investors are braced for what could be a pivotal week in the battle over the future of paintmaker Akzo Nobel, which is resisting a €26.9bn takeover attempt by its US rival PPG Industries.
The Dutch owner of the Dulux brand has rejected three unsolicited buyout offers from PPG since March, arguing they undervalued its business, would lead to substantial job cuts and face a lengthy review by competition authorities.
But Akzo Nobel’s steadfast position has sparked a chorus of investor dissent, with a number of shareholders, led by the hedge fund Elliott Advisors, publicly urging it to the negotiating table.
This has set up the possibility of a hostile takeover bid by PPG, in what has become a bitter transatlantic tussle over one of Europe’s oldest industrial concerns.
A combination of the two companies would create a leader in the $130bn global paints and coatings market, at a time of blockbuster corporate mergers and acquisitions sweeping through the wider chemicals industry.
On Monday, a Dutch business court is set to rule on a case brought by Elliott against Akzo’s management. The activist investor, which has a stake above 3 per cent and is known for its aggressive campaigns to influence corporate boardrooms, is seeking to overturn Akzo’s rejection of its request for a special shareholder meeting to remove chairman Antony Burgmans, who is seen as an obstacle to talks with PPG.
Elliott also wants the appointment of a new supervisory director to oversee the setting up of the requested extraordinary general meeting, at which shareholders would vote on Mr Burgman’s position. Several other shareholders are either backing Elliott’s petition to the court or variants of it.
PPG’s board is then scheduled to meet on Tuesday and could decide whether to walk away from its courtship of Akzo, or launch a hostile takeover bid with a direct offer to Akzo’s shareholders.
Under Dutch takeover rules, PPG must submit formal bidding papers along with evidence of financing by Thursday June 1 to the financial markets regulator AFM for review. Otherwise it faces a six-month “cooling off” period during which it cannot make further takeover attempts for Akzo. The US group has requested an extension of the deadline to June 14 at the earliest.
Michael McGarry, chief executive of PPG, told the FT that shareholders representing more than a quarter of Akzo Nobel’s stock were in favour of the proposed takeover, including all its top-20 shareholders.
“We’ve always said our preferred pathway is a friendly, consensual deal negotiated privately,” he said. “It’s clear to us this is no longer about value.”
To shore up the support of its shareholders, Akzo Nobel has unveiled €1.6bn in dividend payments and a standalone plan that involves the separation of its speciality chemicals division, which would leave a company focused on paints and coatings.
The episode has triggered a political backlash in the Netherlands, where the government is considering a new law to give publicly listed companies greater protection against foreign takeovers.
Akzo Nobel and Elliott declined to comment.