AkzoNobel rejected PPG’s third takeover bid this week, but the drama is far from over.
The Dutch industrial paints and chemical company turned up its nose at the rival paint maker’s third — and reportedly final — takeover offer of about $29 billion. Instead of seeking growth through a major merger or acquisition — like most major players in the chemicals sector — AkzoNobel’s management team has vowed that the company can flourish by instead spinning off its chemical unit.
Officials from AkzoNobel said that all of PPG’s advances undervalued the company. They were also reportedly concerned that PPG wouldn’t succeed at overcoming the required regulatory hurdles, and didn’t think PPG’s sustainability efforts were as robust or as impressive at the program at AkzoNobel.
Now, several of the AkzoNobel’s shareholders have begun publicly lashing out at the company, saying that management, which met with officials from PPG for 90 minutes before rejecting the last offer, aren't giving enough consideration to the deal
Tweedy Browne, one of AkzoNobel’s top 20 shareholders, recently called the company’s management a “hoax” and said there is a “crisis of confidence” among investors. In a letter to AkzoNobel’s CEO, Ton Buchner, Tweedy Browne wondered why the company, which has acquired other businesses, is reluctant to be on the receiving end of an acquisition.
“There are no valid reasons left for AkzoNobel to not at least talk to PPG… The decision not to proceed can still be made but it would of course require transparency and a detailed explanation rather than qualitative smoke and mirrors,” the investment firm wrote.
Tweedy Browne also said the company’s investors have “no faith” in AkzoNobel’s plans to go it alone.
Meanwhile, another shareholder, Elliot Advisors, has launched a legal effort to oust Buchner from his post.
Analysts also predict that AkzoNobel’s ongoing rejections could lead PPG to go directly to shareholders in a hostile takeover attempt.
“The battle continues,” a shareholder told Bloomberg. “The dissatisfaction among large shareholders grows, and pressure was already high. I don’t exclude a fourth bid, and even bigger pressure from shareholders.”
