I don’t care about the money, I’m defending a great British name
Despite a whopping £19bn bid from a US rival, the boss of Dulux refuses to hold takeover talks
EARLY last month Ton Buchner, the super-fit, dog-loving chief executive of the Dutch chemical group that owns Dulux was asked if he’d fancy a coffee with the boss of a rival firm from the US.
The old business acquaintance was Mike McGarry, chairman of the US industrial group Pittsburgh Plate Glass (PPG). As is courtesy among the chiefs of giant firms, Buchner – who runs paint group Akzo Nobel – accepted.
They agreed to meet at the Hilton Hotel at the vast Schiphol airport outside Amsterdam on March 2.
The pair shook hands then McGarry, in the manner of a TV lawyer delivering a writ, produced a sealed white envelope.
Buchner opened it in silence. Inside was a £19.4bn offer to buy out the firm.
Stunned, he promised only to ‘diligently look through the proposal and do the homework’. But no sooner had the handdelivered bombshell hit its target, and before the board could get to grips with the weighty issues, the New York rumour mill started bubbling.
Seven days after getting the bid, Buchner had to go public. He revealed he’d received ‘an unsolicited, uninitiated, unentertained offer which Akzo was firmly rejecting’. But, to unlock value, he would sell off Akzo’s speciality chemicals division.
Buchner has been in London this week, to rally support from shareholders. A remarkable 40pc of the Dutch-listed company’s register are based in the UK, a legacy of its own opportunistic takeovers of two great British corporate enterprises, Courtaulds and ICI.
He’s involved in a war. PPG has this week boasted of having almost all of Akzo’s top 20 investors on its side.
Activist shareholders, including the aggressive American fund Elliott Advisors, are trying to force him to engage with the American predator. So far, Buchner has refused. ‘There is no reason for you to go and engage with an offer if it’s unacceptable,’ he says.
Buchner insists the US group and restless investors must wait until April 19 when his company will unveil new strategic plans.
TAKING a leaf out of the book of fellow Dutchman Paul Polman, chief executive of Unilever, he is not prepared to take a hostile bid, based on price, as a reason to sell Akzo’s corporate soul.
In contrast to many British firms, who are only too happy to bite the hand of buyers without consideration of broader stakeholder and public interest, the 51year-old is adamant that other factors including the well-being of the company’s 80,000 UK pensioners must be part of the package.
Indeed, at times he appears more enthusiastic about the UK brands and Britain’s research and development culture than many FTSE quoted firms. ‘We have a large decorative paint R&D centre in Slough. We have the global coatings R&D at Felling outside Gateshead. And there we also do our cryogenic fire protections for buildings and platforms,’ he says.
In a comment which ought to be embraced in Whitehall as it seeks to get behind a new industrial strategy, Buchner says: ‘the UK is the supplier of new technologies to the rest of the world.’
It takes a Swiss-educated engineer to make the case for the UK, inside or outside of Europe, which evaded the employers’ group, the CBI, and many of our politicians during the raging Brexit debate.
Ownership of ICI’s world-beating Dulux paint brand may have switched to the Netherlands after the 2007 takeover but the British brand is still a critical part of Akzo’s make-up. ‘We are the proud custodians of the super-brand Dulux that everybody in the UK knows,’ Buchner pronounces.
‘It is a fantastic brand especially when it comes to the shipping and protective coatings industry.’
It has become the battering ram for an assault on the Pacific with Dulux sales soaring in China and fast-growing Asian economies.
Far from betraying Dulux’s British roots the Dutch firm has just invested £100m in a new factory, still employs 3,300 people and has used Dulux to open doors to markets around the world.
In much the same way as Kraft Heinz hoped to use Unilever as its cutting edge in growth markets, so PPG seeks to use Dulux in the same way but without any guarantees of jobs, R&D or pensions in Britain. In his bullish defence of Akzo to the Daily Mail, the Dutch CEO is fully aware of our commitment to British ownership and a public interest test for takeovers.
The difference is that under Dutch law boards are required to assess how a bid might affect the broader range of stakeholders from those involved in R&D to pensioners and the supply chain.
BUCHNER insists that as an Anglo-Dutch company ‘there is a special culture that we carry along and it is where we have invested and where we have our global knowledge’.
In particular the company has been focused on ‘sustainability’ R&D, aimed at making its products ever more energy efficient. For example, devising coatings developed in the UK that can reduce resistance on ships and hygienic paints that resist bacteria in hospitals.
For the 80,000 or so Brits in Akzo’s inherited pension funds, keeping stable ownership is hugely important. It has made a real commitment with the trustees to de-risking the UK funds.
And it has committed £256m a year, more than 10pc of the free cash flow of £1.9bn, to keeping the funds topped up. That cannot be said of some foreign owners, such as Tata Steel, which sought ways to dilute obligations to the old British Steel workforce.
Since PPG unfurled its offer Buchner insists that he has reached out to investors a ‘tremendous amount’.
He says: ‘They have appreciated the decision to separate out speciality chemicals and there is a general view that the PPG offer undervalues the business.’
As for Brexit, it makes no difference to the Dutch group. ‘The building of the Dulux brands will continue. We are totally committed to the UK.
‘Our preferred option would have been for the UK to stay. But we totally respect the decision of the British people.
‘We don’t think there will be an enormous impact,’ is the encouraging verdict of an Continental firm which is among the nation’s export leaders.