Pittsburgh Post-Gazette

Akzo unveils plan to prevent takeover

PPG says merger offers shareholde­rs more value

- By Joyce Gannon

AkzoNobel, the Dutch paints and chemicals business trying to stave off a takeover by Pittsburgh coatings company PPG, on Wednesday unveiled a strategy to unlock value for its shareholde­rs on its own instead of being acquired.

As expected, Akzo’s plan focuses on selling its chemicals unit or listing the business in a stock offering — and returning most of the proceeds to shareholde­rs.

The Amsterdam-based maker of Dulux, Sikkens and other paints also promised shareholde­rs dividends totaling 1.6 billion euros ($1.7 billion) this year, including a special dividend of 1 billion euros in November.

Downtown-based PPG, whose brands include Glidden, Olympic and Pittsburgh Paints, maintained that Akzo shareholde­rs would reap far greater value from an acquisitio­n that would create the largest coatings business in the world.

Akzo’s shares closed at 78.53 euros, up 21 cents, but still well below PPG’s latest offer of 90 euros per share.

Akzo in recent weeks rejected two offers by PPG saying they undervalue­d the company.

In a statement issued after Akzo delivered its plan to an investor conference in London, PPG said it “listened carefully … and we continue to believe in the merits of combining the two companies.”

PPG said Akzo’s plan “will be more risky and create more uncertaint­y for AkzoNobel stakeholde­rs” because it “would create two smaller, unproven companies and result in additional restructur­ing.”

The Akzo plan also was criticized by hedge fund Elliott Management which is leading a push by shareholde­rs to have the Dutch company meet with PPG and negotiate a deal. Elliott has also called on Akzo to hold a special meeting to oust its chairman, Antony

Burgmans.

Ton Buechner, Akzo’s chief executive, said Wednesday he had no updates on whether a meeting would occur.

Detailing plans for his company to remain independen­t, Mr. Buechner said Akzo believes it can sell or spin out the chemicals business within 12 months. That unit accounts for about one-third of Akzo’s revenues and is valued at between 8 billion and 12 billion euros. ($8.6 billion-$12.9 billion).

The company expects to save 50 million euros annually by separating chemicals and is targeting 150 million euros in annual savings from cost improvemen­t programs in its coatings business.

PPG has said its deal would deliver $750 million in cost synergies by combining warehousin­g, distributi­on and raw material purchasing for the two coatings giants.

Among its other arguments in favor of the deal, PPG noted that in the last decade, it provided shareholde­r return of 282 percent compared with 87 percent for Akzo shareholde­rs.

PPG shares closed at $105, up 26 cents. The company will hold its annual shareholde­rs meeting Thursday at the Fairmont Pittsburgh, Downtown, after it releases first quarter results.

Akzo’s announced first quarter earnings Wednesday that beat analysts’ estimates, with profits up 13 percent. It expects operating profit to grow by 100 million euros for all of 2017.

Although PPG hasn’t been able to score a meeting with Akzo, the Dutch Federation of Dutch Trade Unions said it would like to hold discussion­s with the Pittsburgh company because Akzo’s plan as well as an acquisitio­n by PPG would likely lead to job cuts.

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