PPG Industries has launched a third takeover bid for Dutch paints and coatings company AkzoNobel, increasing their offer by about 8 percent to $28.8 billion. A previous bid on March 20th had been rejected within 48 hours, with Akzo arguing that it substantially undervalued the company.
“We are extending this one last invitation to you and the Akzo Nobel boards to reconsider your stance and to engage with us,” Michael H. McGarry, the PPG chairman, wrote in a letter to Akzo Nobel’s management.
Akzo confirmed on Monday that it had received a "third unsolicited proposal" from PPG and said it would “carefully review and consider this proposal,” noting it was required by law to do so.
The pressure is mounting on AkzoNobel ahead of its annual meeting on Tuesday where management will face a group of angry shareholders. Elliott Management, an American hedge fund based in New York City, and other shareholders have been calling on Akzo to take part in takeover talks. Elliot is heading a group of shareholders seeking a special meeting to replace the company’s chairman, Antony Burgmans. AkzoNobel has already said it will reject the move and said replacing Burgmans would be “irresponsible, disproportionate, damaging and not in the best interest of the company, its shareholders and other stakeholders.”
Shares in Akzo, the maker of Dulux paint, jumped about 6 percent to a record high of 82.95 euros since the news broke. The company, based in Amsterdam, reported revenue of €14.2 billion last year. It is one of the leading players in the global paints and coatings market, which is forecast to reach $208,642 million by 2024. A recent report on the market said additional demand for paints and coating from the infrastructure and other various verticals such as aerospace, marine and automotive is driving the market to new heights.
In the period since the second takeover bid, AkzoNobel has focused on its plans as a stand-alone company. It offered shareholders 1.6 billion euros in extra dividends and detailed plans to sell or float its specialty chemicals arm, which had €4.8 billion in revenue last year.
Addressing these plans in a letter to Mr Burgmans, Michael McGarry said: "Despite your rejections, private and public, of our invitations to date, we are confident you will find that a combination of our two companies will be beneficial to your stakeholders - and more beneficial than the revised strategy that you recently announced in response to our proposals."
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(Image Credit - Franklin Heijnen)