Elliott Owns Stake in Akzo Nobel, Pushes for Talks With Suitor PPG -- 2nd Update
March 17 2017 - 6:27PM
Dow Jones News
By Dana Mattioli and David Benoit
Activist investor Elliott Management Corp. owns a stake in Akzo
Nobel NV and is pushing the Dutch paint maker to engage in talks
with suitor PPG Industries Inc., according to people familiar with
the matter.
Elliott has owned a stake since 2016, and had wanted Akzo to
separate its specialty-chemicals business, a move the company said
it would consider last week as it rejected a $22.1 billion takeover
offer from PPG. But now Elliott wants Akzo to consider a sale too,
though only at a higher price than the EUR83 a share ($89.17) PPG
offered, the people said.
In its rejection, Akzo said the bid from PPG "substantially
undervalues" the company. It went on to say, in notably strong
language, that the offer "is not in the interest of its
stakeholders, including its shareholders, customers and employees,"
and that it "carries significant delivery and timing risk for
shareholders, both in relation to substantial antitrust issues,
pension schemes and the achievability of proposed synergies."
Elliott has expressed concerns to Akzo management that it didn't
engage with PPG and that it didn't consult the hedge fund, which
owns less than 3% of Akzo -- the reporting threshold in the
Netherlands.
PPG has made clear it is still interested in a deal with Akzo,
saying in a statement last week that it "continues to believe there
is a strong strategic rationale for the proposed transaction
between PPG and Akzo Nobel and will carefully evaluate and consider
its position and path forward related to its proposal."
As of Friday, the company hadn't made a revised offer for Akzo,
one of the people said.
"We will maintain our fiduciary duty to evaluate any proposals
across all stakeholders," an Akzo spokesman said in a statement
Friday. He added: "We believe we are best placed to unlock the
value from Akzo Nobel ourselves."
The revelation that Elliott is on Akzo's shareholder register
could increase the odds of a sale of the company. Elliott is a
well-known activist that is managed to shake up boardrooms and
trigger sales and other major changes at a succession of companies
in recent years.
In a sign that investors are already hopeful there will be a
deal, Akzo's shares closed Friday in Amsterdam at EUR75.21, up more
than 15% and near their high since last week.
Elliott believes the company should engage with PPG and at the
same time explore separating the specialty-chemicals business, the
people said. It has also raised concerns to management about the
performance of Akzo stock, which before the bid was little changed
in a decade.
Elliott, a $30 billion New York hedge fund, has a history of
agitating for European mergers. Its London office has taken stakes
in several companies and either pushed them to agree to a sale or
forced a bidder to pay more.
Pittsburgh-based PPG, with paint brands including Pittsburgh
Paints, Olympic and Glidden, is seeking a tie-up a year after rival
Sherwin-Williams Co. agreed to buy Valspar Corp. for more than $9
billion.
There have been a number of tie-ups in the broader chemicals
industry too. U.S. giants Dow Chemical Co. and DuPont Co. are
seeking to complete a roughly $60 billion merger, and have offered
to sell businesses to gain approval from the European Union's
antitrust regulator.
Industrial-gas giant Praxair Inc. and Germany's Linde AG agreed
to a roughly $30 billion merger late last year.
Write to Dana Mattioli at dana.mattioli@wsj.com and David Benoit
at david.benoit@wsj.com
(END) Dow Jones Newswires
March 17, 2017 18:12 ET (22:12 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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