Akzo Nobel points to value and ‘culture gap’ as it rejects second PPG bid

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Akzo Nobel has rejected a second takeover bid in less than three weeks from US rival PPG, claiming that the revised offer failed to recognise the value of the Dutch paintmaker.

The owner of the Dulux paint brand said on Wednesday morning that it had received a second “unsolicited, non-binding and conditional proposal” from the Pittsburgh-based chemicals manufacturer on 20 March, valuing Akzo at €22.4bn.

Giving similar reasons to its rejections for the first PPG bid earlier this month, Akzo Nobel said that the proposal failed to reflect the current and future value of the group and also failed to address “the significant uncertainties and risks for shareholders and other stakeholders”.

It added that the proposal would lead to significant job cuts and said that there was “a significant culture gap” between the two companies.

Akzo said the revised proposal represented a value of €88.72 (adjusted for final dividend) consisting of €56.22 (adjusted for final dividend) in cash and 0.331 PPG shares, as at 20 March 2017, per Akzo Nobel share. The previous proposal was for €83 a share.

A firm statement from Akzo Nobel chief executive Ton Büchner said:

This proposal significantly fails to recognize the value of AkzoNobel. Our Boards do not believe it is in the best interest of AkzoNobel’s stakeholders, including our shareholders, customers and employees. That is why we have rejected it unanimously.

We are convinced that AkzoNobel is best placed to unlock the value within our company ourselves. We are executing our plan, including the creation of two focused businesses and new cost structure, and believe this gives us a strong platform for continued profitability and long term value creation for all our stakeholders with substantially less execution risks.

It is the second time this month that Akzo Nobel has rejected a takeover bid from PPG after the US company made an initial unsuccessful approach on 2nd March. That offer, which valued Akzo at €20.9bn, was turned down by the Dutch group on the grounds that the figure undervalued the company and was not in the best interests of customers and employees.

PPG had hinted it would make a second offer, saying after the first rejection that it still believed there was a strong “strategic rationale” for a combination of the two companies.

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