PPG Again Raises Bid for Akzo Nobel -- 3rd Update
April 24 2017 - 12:25PM
Dow Jones News
By Christopher Alessi, Austen Hufford and Andrew Tangel
Paint giant PPG Industries Inc. on Monday raised its offer for
Dutch rival Akzo Nobel NV to EUR24.6 billion ($26.4 billion), the
U.S. firm's third takeover attempt in a two-month-long, unsolicited
courtship.
PPG increased its offer price for Akzo to EUR96.75 a share, up
from its bid last month of EUR88.72 a share. PPG's initial approach
at the start of March was at EUR83 a share.
"It's clear we're not going away," PPG Chairman and Chief
Executive Michael McGarry said in an interview, calling the latest
bid the company's final offer. "It's clear that the shareholders
and the stakeholders will all benefit from PPG being the owner of
the larger, combined company."
Akzo, whose stock was up almost 5% on Monday, confirmed it had
received PPG's updated offer and would "carefully review and
consider" the proposal.
PPG's latest offer comes as Akzo is warding off an effort by
some of its largest investors, including activist investor Elliott
Management Corp., to push the Amsterdam-based company to engage in
negotiations with the Pittsburgh-based firm.
Elliott earlier this month called for a special meeting of
Akzo's shareholders to try to oust the chairman of its supervisory
board, who is seen as an opponent of such a deal. Akzo responded by
saying it strongly supported Chairman Antony Burgmans and would
reject an agenda item seeking to dismiss him. The company hasn't
yet said whether it would agree to hold the extraordinary
meeting.
PPG said the new bid values Akzo at a premium of 24% over its
closing price of EUR78.20 a share on April 21, the last full day of
trading before the revised offer.
That was just days after Akzo unveiled the details of a new
strategy to separate its specialty chemicals unit, which is part of
Chief Executive Ton Büchner's continuing effort to ward off PPG.
Mr. Büchner has repeatedly refused to engage with PPG, calling the
first two takeover offers inadequate.
Mr. McGarry said PPG has gone out of its way to assuage concerns
over the acquisition, including a pledge that the combined company
would be listed on stock exchanges in both New York and in
Amsterdam.
"We have bent over backwards to appease them," Mr. McGarry said,
adding: "There is no room left for them to raise for any further
concerns. It's time for them to come to the table."
Mr. McGarry has said all options remain on the table, though he
wanted to avoid a hostile bid. "We strongly prefer a negotiated
deal with Akzo Nobel, and it to be done privately," he said.
The company told investors on April 19 that it plans to pursue a
dual-track process to have the option to either spin off the
specialty chemicals business as a separate listed entity or sell it
outright, to be completed within the next 12 months.
The Dutch company first announced last month that it planned to
separate its chemicals business, when it disclosed PPG's
interest.
Mr. Büchner said the "vast majority" of net proceeds from the
separation of the chemicals business would be returned to
shareholders. Pretax proceeds from the move could be roughly EUR8
billion, according to analysts.
Akzo said it is targeting increased shareholder returns and
plans to issue a EUR1 billion special dividend to shareholders in
November, with a 50% increase on the regular dividend to EUR2.50 a
share.
Speaking with The Wall Street Journal last week, Mr. Büchner
said that unlike PPG's takeover proposal, his plan to separate the
specialty chemicals division and create value for shareholders
offers a "certainty of execution."
PPG said Monday that its most recent proposal "is vastly
superior to Akzo Nobel's new stand-alone plan."
The latest offer appeared to address some of Akzo's concerns
over how a takeover could affect its stakeholders, including
commitments to maintain Dutch jobs and a promise not to relocate
any of the Dutch firm's European Union production facilities to the
U.S.
"We think the revised offer will be very difficult for Akzo to
reject," analysts at Bernstein Bank wrote Monday. "We think the
most likely outcome is that Akzo grants PPG due diligence to enable
a slightly improved offer," they said.
Write to Christopher Alessi at christopher.alessi@wsj.com,
Austen Hufford at austen.hufford@wsj.com and Andrew Tangel at
Andrew.Tangel@wsj.com
(END) Dow Jones Newswires
April 24, 2017 12:10 ET (16:10 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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