Akzo Nobel determines PPG Industries' sweetened offer too low, weighs options

Dutch paint giant Akzo Nobel NV's board met yesterday to decide on the next course after determining that PPG Industries Inc's revised $28.8-billion offer was too low, Reuters yesterday reported, citing people familiar with the matter.

Late last month, US Fortune 500 paints and coatings major PPG Industries raised its buyout offer for Akzo Nobel to €26.9 billion ($28.8 billion) and threatened to make a hostile bid if the board of the Dulux paint maker did not engage in talks. (See: PPG raises buyout offer for Akzo Nobel to $28.8 bn, threatens to go hostile)

To appease Akzo Nobel's board, PPG has offered several sops, including not shifting any production from Europe to the US, maintaining the company's headquarters for the marine and protective coatings business, and the decorative coatings and speciality materials arm, in the UK and the Netherlands respectively.

After rejecting PPG's two earlier offers, AkzoNobel announced that it would return €1.6 billion to shareholders in 2017 and create two separate companies by hiving off its Specialty Chemicals business

Akzo believes that PPG's latest offer still does not value the company highly enough, especially in light of its plans to unlock value by exploring a spin-off or sale of its specialty chemicals business, and the risks it sees in the potential deal, the report said.

Akzo's board will move cautiously since some of its shareholders like activist hedge fund Elliott Advisors have been urging the company to enter into talks and has also been trying to oust Akzo's chairman Antony Burgmans.

Among the options being considered by Akzo is talking to PPG only about some of the issues that would affect the deal, such as antitrust approval risk, or rejecting it outright without any engagement, the report added.

Akzo is also concerned that any talks with PPG may end up as negotiating on the entire deal.

But it will really be difficult to fend off PPG, which has already said that it plans to submit a formal offer to the Dutch financial markets regulator by 1 June.

The Dutch public holds just 8 per cent shares in AkzoNobel, while Anglo-American investors hold about 65 per cent, with 48 per cent held by North Americans and 17 per cent held by British.