PPG Makes ‘Last Invitation’ to Dutch Rival Akzo

The sweetened $26.4 billion takeover offer could increase the pressure on Akzo Nobel to open talks with PPG after rejecting two earlier proposals.
Matthew HellerApril 24, 2017
PPG Makes ‘Last Invitation’ to Dutch Rival Akzo

PPG Industries has made a revised $26.4 billion offer to acquire Akzo Nobel, turning the heat up on the Dutch maker of Dulux paint to open negotiations rather than risk a takeover battle.

Akzo had rejected PPG’s earlier cash-and-stock offers of 83 euros and 90 euros a share as inadequate. The latest proposal, announced Monday, is for 96.75 euros, representing a 50% premium to Akzo’s undisturbed share price.

“We are extending this one last invitation to you and the AkzoNobel boards to reconsider your stance and to engage with us on creating extraordinary value and benefits for all of AkzoNobel’s stakeholders,” PPG Chief Executive Michael McGarry wrote in a letter addressed to Akzo’s chairman and CEO.

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“Despite your rejections, private and public, of our invitations to date, we are confident you will find that a combination of our two companies will be beneficial to your stakeholders – and more beneficial than the revised strategy that you recently announced in response to our proposals,” he added.

A merger would combine together two manufacturers of products ranging from protective coatings for iPhones to industrial paints and table salt. Pittsburgh-based PPG’s paint brands include Glidden and Olympic.

Akzo has so far declined to engage in merger talks, choosing instead to focus on such initiatives as a potential spinoff of its specialty chemicals arm. But it has come under pressure from Elliott Management, the U.S. hedge fund founded by billionaire Paul E. Singer, and other shareholders to engage with its suitor.

PPG said the spinoff plan “clearly fails to meet the additional growth opportunities that will be available to all employees of the much larger combined company.” Its latest merger proposal includes commitments to divest assets to satisfy antitrust concerns and not to relocate any of Akzo’s European production plants to the U.S.

“It’s time for [Akzo] to quit putting up roadblocks and start facing reality,” McGarry told The Financial Times.

Akzo Nobel said in a news release that it would “carefully review and consider” the offer.