Akzo Nobel Declines Third Takeover Bid from PPG Industries

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Dutch company Akzo Nobel, which makes Dulux paints, on May 08 2017, rejected a third takeover offer by its U.S. rival PPG Industries. Akzo has rejected PPG’s offer worth US$28.8 bn including debt, saying it’s too low and reflected antitrust risks and a lack of cultural understanding of the brand.

The company believes that its own strategy ensures superior and sustainable growth and is lucrative for shareholders and all other stakeholders. The rejection has left PPG Industries pondering whether to attempt a hostile takeover or throw in the towel. The U.S. firm has ample of support from Akzo shareholders, however, opposition from its boards, Dutch politicians, and a raft of Dutch staff are creating a major impediment to the deal.

Akzo Receives Snowballing Pressure from Shareholders

As it seems, the deal would be a combination of two of the largest paints and coatings makers in the world. PPG Industries reckon that this deal can help in achieving savings of US$750 mn due to factors such as lowering input costs and economies of scale on production. Akzo Nobel is facing mounting pressure from a handful of shareholders, including activist investor Elliot Investors, which is supporting the proposed deal. The Dutch firm is constantly insisting that it is better that the company grows on its own, and is warning that a takeover would lead to substantial job losses for its 46,000 employees. The company last month unveiled its plans to spin off its specialty chemical division into a separate business, which would better serve shareholders. It has promised to hand back cash worth almost US$1.4 bn to investors.

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