Akzo Nobel’s top shareholders urge group to engage with PPG
Chief of US group says nearly all Dutch company’s top investors support talks
Almost all the leading shareholders in Akzo Nobel want the Dutch paint company to engage in the €22.4bn takeover negotiations with rival PPG Industries, says the chief of the US group.
PPG’s Michael McGarry told the Financial Times that his company had been in contact with nearly all of Akzo Nobel’s top-20 equity investors, who were “virtually unanimous” in their support for the “parties getting together”.
“[They were] absolutely dismayed that shareholders are being prioritised last in this conversation,” Mr McGarry said.
Akzo Nobel, which owns the Dulux paint brand, has attempted to buck the trend of consolidation sweeping the wider chemicals sector by vehemently rejecting two takeover offers from PPG over the past month.
A combination would create a dominant player in the $130bn paints and coatings industry, but the intransigence of each company’s position has led to an acrimonious impasse amid a war of words.
PPG on Wednesday once again urged Akzo Nobel to discuss the possible tie-up and said that it would submit to the Dutch regulator AFM a draft proposal of a public offer by June 1.
Akzo Nobel said: “We are actively talking to our shareholders and having open conversations about what’s best for the company and how we’re best placed to grow.”
More details will be revealed when a new strategy is unveiled on April 19, it added.
Mr McGarry’s claims will nevertheless pile further pressure on his counterpart at Akzo Nobel, Ton Büchner, who is facing a chorus of shareholder dissent. The hedge fund Elliott has led calls from a number of large investors, representing roughly 17 per cent of all shares, for Akzo to “engage” with its suitor.
The mercurial chief executive of the Pittsburgh-based PPG stressed that all options were on the table, including a hostile takeover if his counterpart at Akzo Nobel refused to engage with PPG.
Akzo Nobel says that PPG’s proposals undervalue the company and its prospects, would result in significant job cuts and necessitate substantial sell-offs on competition grounds, as the two companies are leaders in many segments of the $130bn paints and coatings market.
In addition, Akzo argues that PPG’s plan would create a combined entity with too much debt and has evoked the notion of unbridgeable “cultural differences”. Several seeming mis-steps have punctuated PPG’s courtship, such as the launch of its initial offer in the middle of a fraught Dutch election campaign.
Mr Büchner on Wednesday insisted that he had a plan to “create significant value” at Akzo Nobel “with a proven management team and significantly less risk than [the PPG bid]”.
The Amsterdam-based group intends to separate its speciality chemicals business, which makes everything from road salt to substances used in food, cosmetics and electronics.
Mr Büchner, who has spent five years making Akzo a leaner and more profitable proposition, said that investors had developed a “certain trust” about his management team.
Responding to the antitrust concerns, Mr McGarry said that the “predominant overlap” between the two companies was in western Europe and that there was a “clear and credible path forward”.
A number of prospective buyers had reached out to PPG expressing their interest in acquiring the European assets that the US company would have to dispose of to satisfy EU antitrust regulators, he added.
To assuage worries around potential closures and lay-offs, PPG has made a number of commitments around employment, research and development and maintaining the headquarters of certain business units in Europe.
“I’ve heard people concerned about plants moving to the US — that’s not going to happen,” Mr McGarry said.