Germany: Chemicals Industry Akzo Nobel Declines Third Offer from PPG

Editor: Alexander Stark

Akzo Nobel announced it has declined a third unsolicited, non-binding and conditional proposal submitted by PPG Industries on April 24, 2017, for all outstanding ordinary shares in the capital of Akzo Nobel.

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Ton Buchner, Akzo Nobel CEO, said: "The PPG proposal undervalues Akzo Nobel, contains significant risks and uncertainties, makes no substantive commitments to stakeholders and demonstrates a lack of cultural understanding."
Ton Buchner, Akzo Nobel CEO, said: "The PPG proposal undervalues Akzo Nobel, contains significant risks and uncertainties, makes no substantive commitments to stakeholders and demonstrates a lack of cultural understanding."
(Source: Akzo Nobel)

Ibbenbüren/Germany — This decision follows the analysis of PPG's proposal by the Supervisory Board and Management Board of Akzo Nobel, working closely with their financial and legal advisors. As part of this process, on May 6, 2017, Ton Büchner, CEO, and Antony Burgmans, Chairman of the Supervisory Board of Akzo Nobel, met with Michael McGarry, Chairman and CEO, and Hugh Grant, Lead Independent Director of PPG.

The board of the company, concluded after extensive review and the meeting with PPG that its own strategy would be better and would not contain the risks and uncertainties inherent in PPG's proposal. This strategy would build on the existing growth momentum within Akzo Nobel and create a step change in value creation for shareholders and all other stakeholders.

The revised PPG proposal represents a value (cum dividend), as at April 24, 2017, consisting of € 61.50 in cash and 0.357 shares of common stock of PPG per outstanding ordinary share of Akzo Nobel.

The company declined the offer e.g. because it would undervalue Akzo Nobel, would not include an appropriate change of control premium and contained risks such as losses of value from regulatory remedies and potential leakage of value through loss of customers, key employees and partners. Ton Buchner, Akzo Nobel CEO, said: "The PPG proposal undervalues Akzo Nobel, contains significant risks and uncertainties, makes no substantive commitments to stakeholders and demonstrates a lack of cultural understanding."

Furthermore, their own strategy contained a clear road map to value creation with a commitment to increase shareholder returns for 2017, create two focused businesses within 12 months and increased financial guidance for 2020.

PPG's proposal, by contrast, contained no such commitments on timing other than generic statements, Akzo Nobel said. Moreover, it contained no explanation of how it would execute the complicated separation of individual businesses within the combined business as likely required by anti-trust authorities and does not address any of the inherent risks and uncertainties.

Taking all factors into consideration, including the meeting with PPG, the Boards of Akzo Nobel have concluded that the proposal is not in the best interests of the company, its shareholders and all other stakeholders.

"We have a strong track record of delivering on our commitments and are fully focused on accelerating growth momentum and enhanced profitability with the creation of two focused, high-performing businesses — Paints and Coatings and Specialty Chemicals — which will lead to a step change in growth and long-term value creation for shareholders and all other stakeholders", Ton Büchner said.

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