- Proposal of €90.00 (cum dividend) per
ordinary share is a 40 percent premium to the unaffected AkzoNobel
stock price of March 8, 2017
- PPG has provided its proposal to the
Boards of AkzoNobel and has repeatedly offered to meet to discuss
the proposal and negotiate a recommended transaction
- AkzoNobel refused to meet and rejected
PPG’s significantly enhanced proposal one day after it was
delivered
- PPG has advised AkzoNobel that there
are clear paths to regulatory approval based on the broad,
complementary geographic footprint of the businesses, and AkzoNobel
has rejected PPG’s proposal that the companies’ respective
antitrust experts meet to confirm approach
- Combined company to maintain a solid
investment grade credit rating
- Combined company enhances global
breadth and financial growth prospects
- Compelling opportunity with benefits
for stakeholders of both companies
- Comprehensive proposal addresses all
relevant non-financial matters to the benefit of AkzoNobel and its
stakeholders
- PPG remains willing to meet with
AkzoNobel
PPG (NYSE:PPG) today announced that it made a revised proposal
on March 20, 2017 to acquire Akzo Nobel N.V. (AKZA.AS; AKZOY) for
€90.00 (cum dividend) per ordinary share, comprised of cash of
€57.50 and 0.331 share of PPG common stock. This represents an
increase of €7.00 per ordinary share from PPG’s initial offer.
Including the assumption of net debt and minority interests, the
proposed transaction is valued at approximately €24.5 billion, or
$26.3 billion.
PPG was informed today that AkzoNobel rejected this latest
proposal. To date, the Boards of AkzoNobel have not accepted PPG’s
multiple invitations to discuss its proposals and negotiate a
recommended transaction.
PPG believes this revised proposal strengthens a very attractive
and highly compelling opportunity for both AkzoNobel and PPG, their
respective shareholders and other stakeholders, and comprehensively
addresses all relevant non-financial matters. PPG continues to
believe strongly that a combination of the two companies presents a
unique opportunity to build on the heritage and legacies of the
respective businesses, and that the combination is in the best
interest of both companies’ shareholders and other
stakeholders.
Michael McGarry, Chairman and CEO of PPG, said, “We believe the
revised proposal presents an opportunity for AkzoNobel’s
shareholders to realize extraordinary value, by any measure, for
their shares in AkzoNobel. It provides them with a premium
valuation and the opportunity to receive substantial and immediate
cash consideration and participate in the success of the enterprise
through ownership of shares in the combined company.”
The €90.00 (cum dividend) per ordinary share proposal would
provide a 40 percent premium to AkzoNobel shareholders based on
AkzoNobel’s unaffected closing stock price of €64.42 on March 8,
2017, and is 39 percent above AkzoNobel’s 52-week high stock price
prior to disclosure of PPG’s earlier proposal. The acquisition is
expected to be immediately accretive to PPG’s earnings per share,
excluding expected one-time transaction related costs, and value
enhancing to PPG’s shareholders. PPG’s revised proposal provides a
premium valuation for all of AkzoNobel as presently constituted,
including the coatings businesses and the specialty chemical
business.
PPG’s revised proposal reflects annual run rate synergies of at
least $750 million, which could be achieved from a combination of
the two companies. A substantial portion of these synergies relate
to raw material purchasing, supply-chain management and optimizing
distribution networks based upon PPG’s experience in acquiring
AkzoNobel’s North American Decorative Coatings business.
“A combination of PPG and AkzoNobel would result in enhanced
financial growth prospects for the combined company in the coming
years, which will also accrue to the benefit of all stakeholders of
the combined business,” McGarry said. “PPG has continued to
carefully consider the interests of all AkzoNobel stakeholders,
including shareholders, employees, customers and the communities it
serves. We look forward to the opportunity to engage in dialogue
with AkzoNobel leadership, members of its supervisory board and
other stakeholders to further discuss the merits of this revised
proposal, negotiate a transaction and work together towards an
agreement on mutually acceptable terms. We are respectful of the
questions and concerns that have been raised and look forward to
addressing these in a collaborative manner.
“We are hopeful that AkzoNobel engages with us promptly in order
to further discuss and explore the benefits of a combination for
its stakeholders, including substantial commitments regarding
employees in The Netherlands, research and development and
sustainability.”
Terms of the Revised Proposal
PPG continues to believe that its initial proposal presented a
unique and compelling value for AkzoNobel and its shareholders.
Under its comprehensive revised proposal, PPG would acquire all of
AkzoNobel’s outstanding ordinary shares (including ordinary shares
represented by American depositary shares), at a value of €90.00
(cum dividend), consisting of €57.50 in cash and 0.331 share of
common stock of PPG per outstanding ordinary share (or for each
three American depositary shares). The total value of €90.00 is
based on PPG’s closing stock price of $105.57 and the prevailing
exchange rate ($1.074/Euro) on March 20, 2017.
PPG’s revised proposal represents:
- A value for the total outstanding
equity of AkzoNobel of approximately €22.7 billion;
- A premium of 40 percent over the
unaffected closing price of AkzoNobel of €64.42 on March 8,
2017;
- A premium of 39 percent over the
52-week high unaffected closing price of AkzoNobel of €64.81 on
March 2, 2017;
- A premium of 45 percent over the volume
weighted average price per AkzoNobel share of €62.07 over the three
months ending March 8, 2017;
- A premium of 32 percent over the
unaffected 12-month median broker target price per AkzoNobel share
of €68.00; and
- An attractive implied EV/EBITDA
multiple of 11.6x for 2016 (based on 2016 reported
financials).
Strategic Rationale to Combine Companies
Strategically, the combination of AkzoNobel and PPG would create
an enhanced global paints, coatings and specialty materials
company, combining complementary products, technologies and
geographies, and would:
- Create a stronger competitor in a
highly competitive global marketplace, offering a broader line of
products and technologies cost-effectively to a more diverse
customer base;
- Establish an expanded portfolio of
flagship technologies and brands, including combining PPG’s
electrocoat, compact process, waterborne and light-weighting
technologies with AkzoNobel’s advances in sustainable formulations
and practices and its global Dulux, Sikkens and International Paint
brands;
- Enhance the breadth and speed of
research, development and delivery of new products with extensive
geographic scope and technological reach;
- Create significant cross-selling
opportunities along with a diversified combined sales force to
drive incremental organic sales growth;
- Optimize our combined operational
capabilities and footprint with world-class people and
facilities;
- Be a complementary cultural fit and
continue both companies’ longstanding commitment to being good
employers and corporate citizens that operate in a sustainable and
socially responsible manner. By adding PPG’s Sustainability focus
and its COLORFUL COMMUNITIES™ projects together with AkzoNobel’s
Planet Possible and Human Cities initiatives, the combined company
can enhance the benefits to customers, the environment and the
communities in which people live and operate; and
- Create a larger enterprise that will
provide more personal growth opportunities for all our combined
employees while enhancing our presence and importance in more
communities around the world.
PPG Commitment and Focus
In considering its proposal, PPG believes it is important to
underscore the following:
- Strong Cultural Fit: As a peer of
AkzoNobel with a global presence, including in The Netherlands, PPG
has great familiarity with and appreciation for AkzoNobel’s history
and culture. PPG has long admired and continues to admire the great
value that AkzoNobel places in its employees, customers, suppliers
and other stakeholders. PPG’s values bear remarkable similarity to
AkzoNobel’s – holding a deep appreciation for how vital each of
these stakeholders is to the success of the company and the
communities where it operates. Like AkzoNobel, PPG understands the
importance of being a responsible corporate citizen, and places
great emphasis on doing so throughout the organization. Based on
what PPG knows and has seen through the interactions of the two
companies, including through PPG’s acquisition of AkzoNobel’s North
American Decorative Coatings business and watching AkzoNobel
successfully acquire and integrate ICI Plc in the United Kingdom,
PPG is convinced that a business combination of the two companies
would bring together two cultures that emulate one another in
important ways, enabling the two companies to continue and
reinforce both companies’ longstanding commitment to being good
employers and corporate citizens that operate in a sustainable and
socially responsible manner.
- Proven Ability to Complete Complex
Transactions: PPG’s management team has a demonstrated ability to
structure and complete large, global and complex transactions
spanning a variety of jurisdictions. PPG has successfully
integrated more than 50 acquisitions in the last 15 years,
including the acquisitions of SigmaKalon, AkzoNobel’s North
American Decorative Coatings business and Comex. PPG, along with
its financial and legal advisors, has spent considerable time and
effort in preparation of the revised proposal, to enable the
companies to expeditiously agree on and complete this transaction.
PPG’s track record and the care with which it has prepared its
revised proposal should provide a high level of comfort regarding
the completion of a transaction with PPG.
- Strong Financial Capability: PPG is
committed to maintaining a solid investment grade credit rating for
the combined company. PPG has a strong balance sheet, ample
liquidity and solid investment grade ratings from all three major
U.S.-based credit rating agencies. The company has reliable and
ready access to low-cost capital through cash on hand, and both the
public debt and equity capital markets. PPG does not require and
its proposal would not be subject to a financing contingency.
- History of Strong Performance: Over the
past five years, PPG has delivered total shareholder return of 146
percent, outperforming its industry peer group. PPG has paid
uninterrupted annual dividends since 1899, including approximately
$1.9 billion in dividends in the last five years, and 45
consecutive years of annual per share increases. PPG’s businesses
generate top-tier financial returns and consistently generate
strong cash flow. This history of delivering above-market returns
to shareholders, together with PPG’s strong financial performance,
demonstrates that, following a combination of the two companies,
PPG can continue to deliver the returns that shareholders have come
to expect.
- Commitment to Employees: At PPG, we
understand the importance of employees to the long-term success of
our company, and the importance of investing in our employees and
providing more opportunities. PPG will respect the existing
employment terms of the employees of AkzoNobel, including any
existing social plans, pension plans and covenants, as well as the
terms of the existing individual employment agreements between
AkzoNobel and its employees, in accordance with their terms. PPG
looks forward to engaging with the AkzoNobel works councils to
present its vision and commitment to them.
- Commitment to Research and Development:
Like AkzoNobel, PPG is embedded in the communities in which we
operate and committed to investing to discover and develop new
products and technologies. Far from weakening AkzoNobel’s long-term
commitment to research and development initiatives at major
European universities and research centers, PPG has every intention
of continuing the substantial investment in research and
development.
- Commitment to the Netherlands: While
the overall combined company will be headquartered in Pittsburgh,
we expect AkzoNobel’s current locations in The Netherlands and
throughout Europe to continue to play a significant and meaningful
role in the future operations of the combined company. PPG is
willing to reconfirm its commitment to AkzoNobel that, at a
minimum, the global protective and marine business leadership will
be based in Europe and the global architectural and specialty
materials leadership, including their specialty chemicals business
would be based in The Netherlands.
- Commitment to Communities: PPG has a
history of dedicating its financial resources, applying its
products and using the energy of its passionate employee volunteers
to address the needs of the communities where it operates. In 2016,
PPG supported hundreds of community organizations across 25
countries, including 15 Colorful Communities projects throughout
Europe, with another 15 projects identified for the region in
2017.
- Governance and Management: PPG
anticipates that the stewardship provided by AkzoNobel’s leadership
would continue at the combined company. In addition to adding an
AkzoNobel director to PPG’s current Board of Directors to help
guide the future direction and strategy of the enlarged, global
company, PPG would anticipate significant opportunities for
AkzoNobel’s management team to contribute to the long-term success
of the combined company. PPG has a history of providing
opportunities for leadership and growth to employees of acquired
businesses, including the management teams. As a point of
reference, approximately twenty-five (25) of PPG’s current one
hundred (100) leaders, including two (2) of the seven (7) executive
officers, joined PPG via an acquisition of their company and play
critical roles in the company today.
- Brands: The combined company will
continue the legacies of both companies, including the use of
flagship brands and technologies and investment in research,
development and innovation.
- Corporate Social Responsibility: The
combined company will also continue to maintain a commitment to
operate in a sustainable and socially-responsible manner. PPG has
demonstrated a strong commitment to sustainability, with more than
30 percent of its net sales from sustainable products, and
significant reductions in energy intensity and greenhouse gas
emissions. To aid PPG in addressing the concerns of employees and
other stakeholders, PPG would expect to form an integration
committee with representatives from both companies to help manage a
successful integration of the two companies and preserve the
strengths and cultures of each.
“Like PPG, AkzoNobel has a long, proud history and a
demonstrated commitment to innovation, sustainability, community
engagement and people development,” added McGarry. “We would look
to continue to build on these commitments and demonstrate the
positive difference that the combined company can make with all
stakeholders, including customers, employees and society in
general. We are excited at the possibilities that can be
accomplished together in the future.”
PPG is ready to move swiftly and is in a position to complete a
confirmatory due diligence simultaneously with the negotiation of a
merger protocol with a view to come to a recommended transaction
within a short period of time. PPG expects such merger protocol to
be customary for transactions of this nature, in particular with
respect to non-financial covenants relating to employees,
integration, governance, strategy, organization and post-closing
restructurings.
PPG has submitted a proposal to the Boards of AkzoNobel to
combine their respective businesses by way of a public offer for
all issued and outstanding ordinary shares of AkzoNobel. The offer
will be subject to pre-offer and offer conditions customary for
transactions of this nature, including but not limited to a minimum
acceptance level, required regulatory clearances having been
obtained, PPG’s shareholders having approved the issuance of PPG
common stock and no material adverse change having occurred. PPG
will determine and confirm the conditions to the offer in
accordance with applicable laws.
No agreement has been reached and there can be no assurances
that any transaction will result from this proposal.
PPG will make further announcements if and when appropriate.
This is a public announcement by PPG pursuant to the provisions
of section 5 paragraph 2 of the Decree on Public Takeover Bids
(Besluit openbare biedingen Wft) of the Netherlands in connection
with a potential voluntary public offer by PPG for all the issued
and outstanding ordinary shares in the capital of AkzoNobel. This
announcement does not constitute an offer, or any solicitation of
any offer, to buy or subscribe for any securities. Any offer will
be made only by means of an offer memorandum. This announcement is
not for release, publication or distribution, in whole or in part,
in, into or from, directly or indirectly, any other jurisdiction in
which such release, publication or distribution would be
unlawful.
PPG Overview and its History and Commitment in The
Netherlands
PPG: WE PROTECT AND BEAUTIFY THE WORLD™
PPG is a leading global supplier of paints, coatings and
specialty materials. PPG has annual revenues of approximately $15
billion and a current market capitalization of approximately $27
billion. Over $4.1 billion of PPG’s annual revenues is in Europe,
with approximately $360 million in annual revenues in The
Netherlands where it has a deep commitment and a long history in
the country, dating back nearly 300 years.
Today, PPG employs more than 45,000 employees worldwide, with
nearly 1,000 in The Netherlands and another 14,000 across the rest
of Europe, the Middle East and Africa. PPG operates over 150 plants
globally, including 45 plants across 15 countries in Europe, with
facilities in Tiel, Delfzijl, Amsterdam, Uithoorn, and Den Bosch in
The Netherlands.
At PPG, employees work every day to develop and deliver the
paints, coatings and materials that customers trust to protect and
beautify their products. Through dedication and creativity, PPG
employees solve their customers’ biggest challenges, collaborating
closely to find the right path forward.
PPG serves the construction, consumer products, industrial and
transportation markets and aftermarkets. Ranked 182 on the FORTUNE
500, PPG was named Fortune’s most admired company in the chemicals
sector in 2017.
Every day, PPG collaborates with employees and community
partners to make its vision of bringing color and brightness to
communities a reality. PPG dedicates its financial resources,
products and its passionate employee volunteers to address the
needs of communities and to help transform and brighten lives.
In 2016, PPG supported hundreds of community organizations
across 25 countries. PPG’s signature program is its COLORFUL
COMMUNITIES™ initiative, which increases its commitment to invest
in communities and supports projects that transform community
spaces, providing PPG volunteers and donated PPG products. Since
the program’s launch, PPG employee volunteers completed nearly 60
Colorful Communities projects, positively impacting 1.8 million
people. This included 15 projects in Europe, including the
beautification of the Amsta Karaad residential care facility in
Amsterdam. PPG has approximately 80 Colorful Communities projects
planned for 2017, with more than 15 identified within Europe.
PPG also has been a significant financial contributor to the
NEMO Science Center in Amsterdam, and the company matches employee
charitable contributions in The Netherlands and across Europe in
addition to our North American operations.
PPG will soon be reporting in its 2016 Sustainability Report
that since 2012, the company has reduced its waste disposal
intensity by 11% and reduced its greenhouse gas intensity by 29%,
to mention just a few of the accomplishments. PPG’s efforts and
activities have been recognized worldwide, including in 2015, when
Fiat Chrysler Automobiles Group named PPG its “Sustainability
Supplier of the Year” for the Europe, Middle East and Africa
region.
For a copy of the revised proposal letter from PPG to AkzoNobel,
click here. To learn more about PPG, visit www.ppg.com.
Forward-Looking Statements
This press release contains certain statements about PPG
Industries, Inc. (“PPG”) that are “forward-looking statements”
within the meaning of the U.S. Private Securities Litigation Reform
Act of 1995. These matters involve risks and uncertainties as
discussed in PPG’s periodic reports on Form 10-K and Form 10-Q, and
its current reports on Form 8-K, filed from time to time with the
Securities and Exchange Commission. The forward-looking statements
contained in this press release include statements about the
proposed acquisition of AkzoNobel N.V. (“AkzoNobel”) by PPG (such
proposed acquisition, the “Transaction”), the terms of the proposed
Transaction and the expected benefits of the Transaction for PPG,
AkzoNobel and their respective shareholders. Without limitation,
any statements preceded or followed by or that include the words
“targets,” “plans,” “believes,” “expects,” “intends,” “will,”
“likely,” “may,” “anticipates,” “estimates,” “projects,” “should,”
“would,” “could,” “positioned,” “strategy,” “future,” or words,
phrases or terms of similar substance or the negative thereof, are
forward-looking statements. These statements are based on the
current expectations of the management of PPG and are subject to
uncertainty and to changes in circumstances and involve risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied in such forward-looking statements.
In addition, these statements are based on a number of assumptions
that are subject to change. Such risks, uncertainties and
assumptions include: whether an agreement in respect of the
Transaction will be negotiated and executed; uncertainties as to
whether AkzoNobel will cooperate with PPG regarding the Transaction
and whether AkzoNobel’s management or supervisory boards will
endorse the Transaction; the effect of the announcement of the
Transaction on the ability of PPG and AkzoNobel to retain
customers, to retain and hire key personnel and to maintain
favorable relationships with suppliers; the terms of the proposed
Transaction; the timing of the proposed Transaction; the
satisfaction of any conditions to the completion of the Transaction
and other risks related to the completion of the Transaction and
actions related thereto; risks relating to any unforeseen
liabilities, future capital expenditures, revenues, expenses,
earnings, economic performance, indebtedness, financial condition,
future credit ratings, future prospects; business and management
strategies; the expansion and growth of PPG’s and AkzoNobel’s
operations; PPG’s ability to integrate AkzoNobel’s business
successfully after the closing of the Transaction and to achieve
anticipated synergies and benefits; and the risk that disruptions
from the Transaction will harm the combined companies’ business.
However, it is not possible to predict or identify all such
factors. Consequently, while the list of factors presented here is
considered representative, no such list should be considered to be
a complete statement of all potential risks and uncertainties.
Unlisted factors may present significant additional obstacles to
the realization of forward-looking statements. Forward-looking
statements included herein are made as of the date hereof, and PPG
undertakes no obligation to update publicly such statements to
reflect subsequent events or circumstances.
Additional Information About the Proposed Transaction and
Where To Find It
An agreement in respect of the Transaction described in this
press release has not yet been executed, and this press release is
neither an offer to sell securities, a solicitation of a proxy, nor
a substitute for a registration statement or proxy statement or
other filings that may be made with the SEC. Any proxy solicitation
of PPG’s shareholders will be made through materials filed with the
Securities and Exchange Commission (“SEC”) and no offer of
securities to U.S. security holders or holders of ADRs representing
AkzoNobel shares shall be made except by means of a prospectus
meeting the requirements of the Securities Act of 1933, as amended.
Should an agreement with respect to the Transaction be reached, PPG
expects to file relevant materials with the SEC, including a
registration statement on Form S-4 and a proxy statement. Investors
and security holders are urged to read all relevant documents filed
with the SEC (if and when they become available), including the
prospectus and proxy statement, because they will contain important
information about the Transaction. Investors and security holders
will be able to obtain these documents (if and when available) free
of charge at the SEC’s website http://www.sec.gov, or from PPG’s
website http://investor.ppg.com/.
Participants in the Solicitation
This press release is neither a solicitation of a proxy nor a
substitute for any proxy statement or other filings that may be
made with the SEC. Nonetheless, PPG and its affiliates and their
directors and executive officers and certain employees may be
deemed to be participants in the solicitation of proxies from the
holders of PPG common stock with respect to the Transaction.
Information about such parties and a description of their interests
are set forth in PPG’s 2017 Annual Report. Additional information
regarding the interests of such participants will also be included
in the materials that PPG would file with the SEC in connection
with a Transaction. These documents (if and when available) may be
obtained free of charge from the SEC’s website http://www.sec.gov
or PPG’s website http://investor.ppg.com/.
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PPG Media Contact:Bryan Iams, +1-412-434-2181Corporate
Communicationsbryan.iams@ppg.comorPPG Investor Contact:Scott
Minder, +1-412-434-3466Investor
Relationssminder@ppg.cominvestor.ppg.com
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