AkzoNobel chief defends decision to reject takeover approach by PPG
The boss of AkzoNobel has delivered a bullish defence of the board's decision to bat away an approach by a US suitor despite shareholder pressure to launch talks.
Chief Executive Ton Buchner said a tie-up between the two companies raised competition concerns, as he reaffirmed his position that PPG's second takeover tilt worth 22.4 billion euro (£19.5 billion) had undervalued the company.
It comes after Causeway Capital - the firm's largest shareholder with 6.8% stake - urged the Dulux paint maker to engage with PPG last month, while activist investor Elliott Advisors said it may attempt to oust AkzoNobel's managers if the company fails to start a dialogue.
In an interview released by the Dutch company, Mr Buchner said the board still saw no need to engage with PPG on a potential deal.
"We've very clearly assessed two proposals that we've received from PPG," he said.
"We see that it clearly undervalues the company and the second proposal that we received it did not address the key stakeholder issues and other issues like uncertainties and risks that we had already raised in our response to the first proposal.
"That is why we see no merit in engaging with PPG. It cannot be our duty to actually advise how an offer should be done and let me make it clear we are not requesting anything."
The Dutch manufacturing giant rejected a second non-binding proposal worth 88.72 euro (£76.75) per share in both cash and shares on March 20.
It said the offer failed to ''reflect the current and future value'' of the firm and did not ''address significant uncertainties and risks'' for shareholders and stakeholders.
However, Sarah Ketterer, Causeway Capital's chief executive, said in March that a deal would create a stronger company, and lead to improved prospects for both shareholders and employees.
Elliott, which holds more than a 3% stake, previously said ''most shareholders'' wanted the company to engage with PPG and threatened to call an extraordinary general meeting (EGM) where investors could vote to remove managers if more than half the issued capital is represented.
Top 20 shareholders Columbia Threadneedle and Henderson are also said to be pressing for talks to begin.
Mr Buchner said conversations with investors had been "a tremendously important part" of its activities over the past few weeks.
On the competition concerns, he added: "We are talking about two leaders in the industry in a multitude of industries. There you will see that we compete in many geographies, in many businesses where ever we go literally everyday when we operate in the market.
"Therefore, we do see significant overlaps and therefore significant anti-trust issues going forward."
AkzoNobel, which employs 3,000 staff across the UK, said a merger would trigger ''significant job cuts'' and create uncertainty for thousands of staff across the globe.
PPG, a Pittsburgh-based chemicals manufacturer, said its second offer would deliver annual cost savings of 750 million US dollars (£601 million).
The Dutch company announced plans last month to build a 12.6 million euro (£10.7 million) innovation hub near Gateshead, safeguarding 270 jobs.
The firm is also looking to launch a 110 million euro (£93.7 million) Dulux paint factory in Ashington, Northumberland.
It is expected to update investors on its strategic plan on April 19.