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Akzo Nobel’s largest shareholder has called on the company to “engage in discussions” with US rival PPG Industries over a possible takeover, following the Dutch paint-maker’s rejection of a second bid worth €22.4bn.

Causeway Capital said that while it supported Akzo Nobel’s management view that the latest bid of €90 per share was inadequate, it was “at a level where management should now engage in discussions with PPG to maximize shareholder value and adequately address the interests of all stakeholders”.

“As long-term shareholders, we believe combining Akzo Nobel and PPG would create a stronger company, and lead to improved prospects for both shareholders and employees,” it wrote in a letter to Akzo Nobel’s board and executive committee members.

Causeway owns 6.8 per cent of Akzo Nobel. Its intervention will pile pressure on the Dutch group’s management to enter into talks with PPG, which has seen two approaches this month firmly rejected by its target.

A combination of the companies would create a dominant player in the $130bn paints and coatings market, but Akzo Nobel has said the offers undervalued the company and carried risks of substantial divestments on competition grounds and potential job losses. It insists that the approach does not warrant engagement.

Activist investor Elliott, a top-five shareholder, has threatened to call a special shareholder meeting to remove board members if Akzo Nobel does not engage with PPG. Two other top-20 shareholders, Columbia Threadneedle and Henderson, have also urged Akzo Nobel’s management to speak with their counterparts.

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