PPG Industries has walked away from pursuing a hostile €26.9 billion offer for Azko Nobel, the Dutch owner of Dulux paints, after weeks of fractious wrangling between the two companies.
The American paints and coatings group,which has been rebuffed by Azko Nobel three times, withdrew its interest yesterday after a last-ditch fourth attempt to reach an agreement with the target group failed. PPG claimed that although it had sent a letter on Monday indicating that it might be willing to increase its offer price by a “nominal amount”, Akzo Nobel’s board “did not respond to our call or letter”.
In a sign of how fractious the relationship between the two companies has become, Akzo Nobel rejected this version of events. Ton Büchner, chief executive, said that it had responded to PPG’s letter and was considering the contents but had not had a chance to reply in detail before its American suitor decided to walk away. Mr Büchner said: “We said we would provide feedback and now we have the news that they have withdrawn and so we have to assume the [last] letter and our response to it has not been part of their decision-making.”
Whatever the reason, PPG’s withdrawal means it cannot make another offer for Azko Nobel for at least six months. Its exit from the takeover, however, is unlikely to reduce the focus on the Dutch group, which has angered several of its key shareholders over its failure to engage with PPG. Nearly half of the top 20 shareholders, including some of Akzo’s biggest investors, have publicly criticised the attitude of Mr Büchner and Antony Burgmans, who is chairman of the company that employs 45,000 people around the world.
Elliott Advisors, the American activist investor, and a group of rebel shareholders this week unsuccessfully tried to convince a Dutch court to order Akzo Nobel to hold an extraordinary meeting so that they could vote to remove Mr Burgmans as chairman. However, the Dutch Enterprise Chamber threw out the petition and said that it amounted to an attempt to force the board to change strategic direction, which was not a right that investors had under Dutch law.
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Akzo Nobel has consistently refused PPG’s offers, claiming that they undervalued the company and posed serious execution risks. The Dutch group favours its own standalone strategy, which involves a plan to split its business into paints and coatings and speciality chemicals. The chemicals business, which accounts for about a third of sales and profits, will be sold or floated within 12 months. Akzo also aims to increase shareholder returns by raising this year’s dividend by 50 per cent and paying a €1 billion special cash dividend.
Despite the vociferous objections from some of its shareholders, Mr Büchner claimed that Akzo Nobel had an “open and constructive” dialogue with its investors, adding: “It is not untypical that people who are the most unhappy are more vocal.”