Akzo Nobel will gift its shareholders a total €1.6bn worth of dividends this year as part of efforts to thwart a €22.4bn takeover assault by rival US paintmaker PPG Industries.
The Dutch owner of the Dulux brand has come under pressure from a band of investors – led by the activist hedge fund Elliott – to enter talks with its suitor, from whom it has rejected two bids since March. A tie-up would create a leader in the $130bn global paints and coatings market, but Akzo Nobel has fiercely resisted PPG’s advances.
In an attempt to placate its shareholders, Akzo Nobel said it will return €1bn through a one-off special dividend in November, while its regular payout is to be increased by 50 per cent to €2.50 per share, resulting in a total €1.6bn payout. In comparison, the total amount of last year’s proposed dividend stands at €239m.
Today the company’s management will explain in more detail its vision for the future of Akzo, one of Europe’s oldest industrial concerns with roots to the Swedish inventor Alfred Nobel. Its plans include the separation of its speciality chemicals business, which makes everything from salt to bleaching agents.
Akzo Nobel on Wednesday said this would happen within 12 months, with most of the proceeds to be returned to shareholders. A “dual-track” process is under way with a separate listed entity or a sale under consideration.
Ton Büchner, chief executive of AkzoNobel, said:
Our commitment to substantial shareholder returns reinforces our belief that the plan we are outlining today will create a step change in value creation, generating significant shareholder value in the short, medium and long term. It will be delivered at pace, with a clear timeline and is in the best interest of all stakeholders.
As well as upgrading its financial targets for 2020, the Amsterdam-based group said that core earnings would be around €100m higher this year, due to “significant growth momentum” across all business areas. That would represent a 6.7 per cent increase to 2016′s €1.5bn in earnings before interest and tax, removing one-off items.
Shares in Akzo Nobel dropped 1.3 per cent in early trading on Wednesday morning to €78.32.