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PPG Still Up for Talking to AkzoNobel

Thursday, May 11, 2017

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On Wednesday (May 10), PPG Industries issued a new statement in response to AkzoNobel's (Amsterdam) rejection of its third merger proposal. According to the release, the Pittsburgh-based company still thinks combining the companies is the best fit.

AkzoNobel Center

AkzoNobel announced Monday that it had rejected PPG's third merger proposal; PPG said Wednesday that it still hopes to bring the Dutch company to the bargaining table.

While PPG had characterized its third offer, valued around $28.8 billion, as “one last invitation” for AkzoNobel to the bargaining table, the world’s largest coatings company left the door open for future negotiations in its statement. “PPG remains willing to meet with AkzoNobel to engage in meaningful discussions," the statement says, "but without productive engagement, PPG will assess and decide whether or not to pursue an offer for AkzoNobel.”

Hostile Takeover Coming?

After the third proposal was rejected, some speculated PPG might consider a hostile takeover bid for AkzoNobel, which is the second-largest coatings company in the world by sales. Bloomberg reports that PPG Chairman and CEO Michael McGarry has said he will pursue a takeover if AkzoNobel is not willing to negotiate by June 1.

Michael McGarry, Ton Buchner
Images courtesy of PPG (McGarry,), AkzoNobel (Büchner)

According to reports, PPG Chairman and CEO Michael McGarry (left) may pursue a hostile takeover bid for AkzoNobel if Ton Büchner and AkzoNobel don't come to the bargaining table this month.

In a hostile takeover, a company seeking to acquire another firm appeals directly to the firm’s shareholders in order to circumvent resistance from executives. The practice can also include attempting to have executives at the firm replaced. Earlier in the negotiation process, hedge fund Elliott Advisers called for a special meeting of AkzoNobel shareholders in an effort to unseat AkzoNobel Board of Supervisors Chair Antony Burgmans; the company denied the request.

Matters in Question

In rejecting PPG’s most recent offer, AkzoNobel said that the proposal still undervalued its company, and would be subject to regulatory risks and delays given its scale.

In its new statement, PPG argues that the concerns AkzoNobel has could have been discussed at a recent meeting between executives from the two companies, but that AkzoNobel refuses to negotiate.

“The remaining questions raised by AkzoNobel are common negotiation points and can be quickly and reasonably resolved through an open, substantive two-way dialogue in which both parties are motivated and engaged,” McGarry said in the statement. “This is the type of discussion we sought in our meeting with Mr. Antony Burgmans and Mr. Ton Büchner in Rotterdam on May 6. AkzoNobel, however, has chosen not to engage in meaningful discussions, has refused our invitation for a meeting of our respective antitrust counsels and has provided no transparency in concluding its standalone plan is superior to PPG’s proposal.”

On Monday, in the immediate wake of AkzoNobel’s rejection announcement, PPG issued a statement in which it said the Dutch company’s refusal to engage on the proposal “reflects a continued lack of proper governance.”


Tagged categories: Acquisitions; AkzoNobel; Business matters; Mergers; PPG

Comment from Jesse Melton, (5/11/2017, 11:09 AM)

Meaningful negotiations meaning willing to sell out so a US company can bury financial problems in an M&A deal. There are two proxy houses that have significant stakes in AkzoNobel and one of them is never going to be willing to get railroaded by PPG. Most of the preferred shares are held by investment management companies and a few banks and the banks are tied up in both companies, so they'll be required to abstain if a vote even comes up. PPG is simply trying to save face after being repeatedly rebuffed so publicly. It's clear AkzoNobel shareholders aren't interested in the deal.

The big question is who is going to be the new CEO at PPG?

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