Akzo Says Review of PPG's $29 Billion Offer Will Take Time

  • Chairman speaks in Amsterdam at annual shareholders’ meeting
  • PPG CEO has said offer could become hostile without talks

Akzo Nobel NV Chairman Antony Burgmans said the Dutch paintmaker is still considering a sweetened 26.9 billion euro ($28.8 billion) takeover offer from U.S. rival PPG Industries Inc., dashing the hopes of some investors who are calling for a quick move to talks between the two companies.

“The board and supervisory board of Akzo Nobel will carefully review and consider the proposal together with our legal and financial advisers,” he told shareholders at an annual meeting in Amsterdam Tuesday. “As you can imagine, such an analysis takes time. As long as we’re looking into that we cannot elaborate on it.”

Antony Burgmans on April 25.

Photographer: Jasper Juinen/Bloomberg

During the event, Burgmans faced criticism from some investors who urged the manufacturer to begin discussions with PPG or offer a detailed explanation about why the company’s alternative proposal for a breakup offers more value. He also sparred with a representative of Elliott Management Corp., the activist investor controlled by billionaire Paul Singer that is calling for his ouster.

Pressure has increased on Akzo Nobel after PPG Chief Executive Officer Michael McGarry said Monday he plans to make a hostile takeover bid if the Dutch paintmaker declines to start talks about the latest offer. Elliott has joined with other holders to call on Akzo Nobel to reconsider after the company rejected two previous proposals. The company earlier dismissed a formal request from Elliott for an extraordinary shareholders’ meeting to vote on removing the chairman, saying the move went against Dutch law and the board backs Burgmans.

“The request is irresponsible, disproportionate, damaging and not in the best interests of the company,” Akzo Nobel said in a statement. “It is essential that the steady and experienced hand of the supervisory board and its chairman remains focused on the task of steering the company at this crucial time."

PPG would take its proposal directly to investors if there is no agreement by June 1, McGarry said in a telephone interview. PPG is looking for a deal that would combine the world’s two largest makers of paints and coatings amid a wave of chemical industry consolidation.

The new unsolicited offer is 8 percent more than the most recently rejected bid and 50 percent more than Akzo Nobel’s closing price on March 8, before PPG’s interest became public. It constitutes cash and stock valued at 96.75 euros a share including a dividend that the Dutch company plans to pay, the Pittsburgh-based company said Monday in a statement.


Akzo Nobel CEO Ton Buechner last week detailed a plan to split the company in two and reward investors with a higher dividend, saying it offered more value than a takeover. The CEO told shareholders the financial goals are “certainly ambitious, but achievable.” PPG, the world’s largest coatings maker, said the new offer is superior to that plan.

PPG’s bid is “as sweet as it gets,” ING analyst Stijn Demeester wrote in a note, adding that Akzo’s financial ambitions are “stretched at best.”

Perfect execution of Buechner’s strategy would imply a net present value of 95 euros per share, which still compares negatively to PPG’s bid price, he said.

Burgmans has said a takeover would be too risky for the Dutch company because gaining antitrust approval would be long and complicated.

“We need to consider this new bid carefully, also in the light of our new strategy and the enhanced financial prospects,” he said told investors. “We will come back within a reasonable period of time.”

Akzo Nobel shares ended 0.9 percent higher at 82.64 euros in Amsterdam, valuing the company at 21 billion euros. PPG shares rose 1.5 percent to $109.59 at 12:31 p.m. in New York.

The prospect of transatlantic dealmaking has heightened investor interest in Akzo Nobel, which was forced to change the venue of its shareholder meeting to a local convention center that can hold 500 people. The gathering normally attracts about 50 to its headquarters.

Before the AGM, Buechner addressed about 450 employees, thanking them for their support “during these agonizing times.”

(A version of this story was corrected to show CEO spoke to employees at AGM venue.)

(Updates share prices in 13th paragraph.)
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