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PPG Reiterates Akzo Invitation

Friday, April 7, 2017

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For the third time in under a month, PPG Industries (Pittsburgh) is trying to set up talks with Dutch coatings firm AkzoNobel (Amsterdam).

The Latest

Late Wednesday night (April 5) PPG, the world’s largest coatings company, issued a press release reiterating its invitation to AkzoNobel to “discuss the combination of the two companies,” stating that the company still believes the move to be a smart strategy that AkzoNobel should entertain.

“We made a compelling offer to AkzoNobel that provides its shareholders with a significant premium and the opportunity to benefit from the upside potential of a stronger company that is well positioned for future growth and value creation," said Michael McGarry, PPG Chairman and CEO. "Together, we can create a stronger company that will benefit all of AkzoNobel’s stakeholders, including its Netherlands-based employees."

The statement, however, did not detail any new information from PPG, which AkzoNobel global senior spokesperson Andrew Wood underlined when he spoke with D+D News via telephone.

Ctoocheck, public domain, via Wikimedia Commons

Late Wednesday night (April 5) PPG, the world’s largest coatings company, issued a press release reiterating its invitation to AkzoNobel to “discuss the combination of the two companies,” stating that the company still believes the move to be a smart strategy that AkzoNobel should entertain.

“We’ve already made our position quite clear,” Wood said, referencing the previous two proposals from PPG that AkzoNobel already rejected and labeled “unsolicited.”

Background

The first offer, which came on March 8, equaled about 83 euros a share with an overall value of $22 billion. At that time, AkzoNobel CEO Ton Büchner said in a statement that the proposal undervalued the company and contained major uncertainties.

“The proposal is not in the interest of AkzoNobel’s stakeholders, including its shareholders, customers and employees, and we have unanimously rejected it,” he said.

The second offer came on March 20, with a price tag of 88.72 euros a share—an estimated $26.3 billion value overall.

“We believe the revised proposal presents an opportunity for AkzoNobel’s shareholders to realize extraordinary value, by any measure, for their shares in AkzoNobel,” McGarry said at the time, calling the two companies a “strong cultural fit.”

That proposal was rejected just days later, with AkzoNobel saying that the new offer didn’t address any of the issues the company had raised weeks earlier, including the number of divestitures a proposal would require.

AkzoNobel

Amsterdam-based AkzoNobel has already rejected two proposals from PPG.

Büchner pointed to the company’s own plan in the works, which would separate its Specialty Chemicals business.

Looking Ahead

With its newest move, PPG noted that, according to their talks, many shareholders of AkzoNobel are in favor the companies coming together for discussion.

“The resounding feedback we have received in the Netherlands, the U.K. and the U.S. further validates the merits of combining PPG and AkzoNobel,” McGarry said, adding that the company is “prepared to address all of AkzoNobel’s concerns.”

Wood stressed that AkzoNobel’s position hasn’t changed, and said that the company is “focusing on our own plans,” which is in reference to a scheduled company presentation to its shareholders on April 19. He would not comment on whether this presentation would sway any shareholders who want to see the PPG proposal taken more seriously.

That investor update will outline the plan and benefits of the Specialty Chemicals business separation. The company will also release its first quarterly earnings report.

"Our new strategy will further unlock the value within the company, including the creation of two focused businesses," Büchner said in a statement. It will "deliver improved profitability and additional long-term value creation for shareholders, employees (and) customers," he added.

AkzoNobel

That investor update will outline the plan and benefits of the Specialty Chemicals business separation. The company will also release its first quarterly earnings report.

This presentation is ahead of the company’s annual meeting on April 25.

Previous Numbers

AkzoNobel is the second-largest coatings manufacturer in the world—behind PPG—according to 2016 sales figures. PPG purchased AkzoNobel’s North American decorative paints business in 2013 for more than $1 billion.

The separation of Specialty Chemicals, the company says, would “allow the Specialty Chemicals business to continue to build and accelerate its market-leading positions across a range of market segments.” AkzoNobel’s Specialty Chemicals business had 4.8 billion euros in revenue in 2016, the company says.

AkzoNobel reported 14.2 billion euros in revenue in 2016. Its Specialty Chemicals business reported a 4 percent drop in revenues in 2016 as compared with 2015, due to factors including exchange rates, acquisitions and divestments, and price mix, but reported a 1 percent increase in volumes.

PPG reported $14.75 billion in revenue last year. Its Performance Coatings segment accounted for 58 percent of sales; Industrial Coatings accounted for 39 percent, and glass accounted for 3 percent.

   

Tagged categories: AkzoNobel; Business management; Business matters; Coatings; Finance; Mergers; PPG; Specialty Coatings

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