PPG ups AkzoNobel offer to €26.9bn

PPG has raised its offer for AkzoNobel to €26.9bn (US$28.8bn), including net debt, in a final effort to take over the Dutch company.

AkzoNobel has so far resisted PPG’s takeover attempts, rejecting the second offer, of €22.4bn, on 22 March. On 19 April it announced a plan to sell off its specialty chemicals unit within a year, to focus on paints and coatings and create value for shareholders. However, PPG says that a takeover will deliver more value. It has increased its share price offer by €6.75 to €96.75, made up of €61.50 in cash and 0.357 shares of common stock of PPG, a 50% premium on AkzoNobel’s closing share price on 8 March, before news of a takeover bid emerged. PPG says that a combined company would save up to US$750m/y in costs.

In an effort to sweeten the deal, PPG has made a number of pledges, including a “significant” reverse break-up fee should the deal fall through on antitrust grounds, as it “is confident that all required antitrust approvals can be obtained in a timely manner.” PPG says it is prepared to have a dual listing of shares, trading on both the New York Stock Exchange (NYSE) and Euronext Amsterdam.

The company has promised that no current AkzoNobel or PPG employee will lose their job as a direct result of a takeover, and that none of AkzoNobel’s European production plants will move to the US. Local suppliers to AkzoNobel in the UK and Europe will be invited to supply the new, merged company. The architectural and decorative paints division would continue to be headquartered in the Netherlands, while the marine and protective coatings business would continue to be based in the Netherlands and the UK. AkzoNobel brands, such as Dulux and other international paint brands, will be recognised and enhanced.

In addition, PPG says that R&D spending in the Netherlands and the UK will be at least as much as it is now, and existing research partnerships with universities will be maintained. AkzoNobel’s R&D centre in China will be retained for the merged company.

“We are extending this one last invitation to you and the AkzoNobel boards to reconsider your stance and to engage with us on creating extraordinary value and benefits for all of AkzoNobel’s stakeholders. Our revised proposal represents a second increase in price along with significant and highly-specific commitments that we are confident AkzoNobel’s stakeholders will find compelling. We stand ready to work with you expeditiously to complete a targeted due diligence review and to negotiate a definitive agreement for the combination,” said PPG Chairman and CEO Michael McGarry.

AkzoNobel confirmed that it had received a “third unsolicited and conditional proposal for the company and added: “In accordance with its fiduciary duties and acting under the Dutch governance code the board of management and supervisory board of AkzoNobel will carefully review and consider this proposal.

The company made no further comment.