Strategy

Dutch Paint Maker Rebuffs PPG’s $22B Offer

Akzo Nobel says the unsolicited proposal "substantially undervalues our company and contains serious risks and uncertainties."
Matthew HellerMarch 10, 2017
Dutch Paint Maker Rebuffs PPG’s $22B Offer

PPG Industries is continuing to pursue Akzo Nobel even though the Dutch maker of Dulux paint rejected its unsolicited $22 billion takeover bid as inadequate.

A merger would combine together two manufacturers of products ranging from protective coatings for iPhones to industrial paints and table salt. PPG’s offer valued Akzo Nobel at 83.00 euros ($87.60) a share, a 29% premium to the undisturbed price at the close on Wednesday.

Akzo Nobel rejected the bid on Thursday and said it was instead looking at spinning off its specialty chemicals business, which contributed about a third of its 14.2 billion euros in revenue last year.

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“The unsolicited proposal we received from PPG substantially undervalues our company and contains serious risks and uncertainties ,” Akzo Nobel CEO Ton Büchner said. He added: “Along with my colleagues on our boards, our executive team and our thousands of employees, I firmly believe that Akzo Nobel is best placed to unlock the value within our company ourselves.”

Michael McGarry, chief executive of PPG, responded that he was “confident that this combination is in the best interests of the stakeholders of both companies as it presents a unique opportunity to build on the successful legacies of our businesses.”

Jeremy Redenius, an analyst at Bernstein, agreed. “We think a combination is credible and potentially powerful,” he told The Financial Times.

Pittsburgh-based PPG’s paint brands include Glidden and Olympic. The companies have complementary products and combining the two companies could generate “an enhanced global player” in paints, coatings and specialty materials, McGarry said.

The FT said any deal “would likely face significant scrutiny from antitrust authorities given the overlap between the two companies and the already limited range of competition.”

“There has been growing concern in the Netherlands over foreign entities seeking to buy some of the country’s largest companies,” The New York Times noted. “General elections will be held next week, and politicians have expressed worries about the vulnerability of Dutch companies to foreign takeovers.”

Akzo Nobel also makes Eka bleaching solutions and Interpon powder coating.

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