AkzoNobel rejects PPG takeover bid
AkzoNobel has rejected a €20.9bn takeover bid from PPG Industries.
However, the bid has sparked action from AkzoNobel, which says it is now considering separating its specialty chemicals business.
Bloomberg reports that AkzoNobel rejected the PPG bid, worth €83 per share and nearly 30% above AkzoNobel’s closing level last Wednesday, saying it substantially undervalued the company.
Chief executive Tom Buechner said, ‘AkzoNobel has enjoyed a record performance in recent years in terms of profitability and has made significant strategic progress, allowing us to take this decision.’
He said the proposal brought ‘serious risks and uncertainties’ although he did not rule out a change in position should PPG increase its offer, saying, ‘Any future proposition is pure speculation.’
AkzoNobel has already shown a certain degree of appetite for consolidation with PPG. When Tom Buechner took over AkzoNobel in 2014 he agreed to sell its US decorative paints business to PPG for about $1bn.
However, the latest offer for the entire company was rejected after being reviewed by both the management and supervisory boards, along with financial and legal advisers.
They came to the conclusion it would leave the combined company with too much debt, while also threatening research and development, thousands of jobs, and customer relationships.
Instead, AkzoNobel says the approach has brought forward discussions to create a spin-off chemicals company, freeing the paint company from any distractions.
The CEO said there was a ‘strong rationale’ for creating two separate businesses.