Amsterdam, Netherlands — March 22, 2017 — AkzoNobel has rejected a second bid from PPG. This offer was significantly higher than the previous offer, about $24.19 billion USD as opposed to $22 billion. An official statement from AkzoNobel says the new proposal does not address the concerns expressed by AkzoNobel’s Boards in rejecting the initial offer.
“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,” said Ton Buechner, CEO of AkzoNobel. “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.”
The official statement from AkzoNobel spells out some of the reasons for rejecting the new bid. Significantly, there are major geographical and segment overlap for both companies. Anti-trust legislation might mean substantial divestures in this case. It seems likely that it would also lead to significant job cuts around the world.
A merger of the two companies could be expected to result in the restructuring of the employee base, which a statement from AkzoNobel says would almost certainly lead to job losses.
The second bid by PPG was higher than the first, but the official position of AkzoNobel is that it still undervalues the company. However, it is not simply a matter of lining up more dollars.
“This is not solely about price,” Buechner said, according to a report by Reuters. “This unsolicited proposal simply doesn’t warrant Akzo Nobel engagement with PPG.” The official statement from AkzoNobel also cites “a significant culture gap between both companies.”
AzkoNobel is headquartered in the Netherlands. Some Dutch politicians have come out against the takeover. Economic Affairs Minister Henk Kamp has said the deal would not in the Netherlands’ national interest.
None of this necessarily means the deal won’t happen at some point. The Dutch Shareholders’ Association (VEB) has said PPG should be given a hearing.
“The second offer addressed many of Akzo’s concerns about research and development, jobs and the firms’ cultures, so they should at least discuss it,” said Paul Koster, Director of VEB.
PPG has urged AkzoNobel to negotiate. A statement from the company says the latest bid offered a 40 percent premium compared to the price before the first approach was announced.
“We believe the revised proposal presents an opportunity for AkzoNobel’s shareholders to realize extraordinary value, by any measure, for their shares in AkzoNobel,” said PPG Chairman and CEO Michael McGarry.
