DIYWEEK.net

PPG announced that it has walked away from its bid to take over Dulux parent Akzo Nobel, despite discussing a proposed price increase and sweeteners to the deal. 

The US paint firm today announced that it has withdrawn its proposal to combine with Akzo Nobel and will not pursue a public offer for all the issued and outstanding shares of its Dutch rival. PPG said it made its final decision today after “careful consideration”, which included the stakeholder interests of both companies.

PPG chairman and CEO Michael McGarry said: “We were hopeful throughout this process that Akzo Nobel’s boards would see the merits of our compelling proposal to combine our two great companies and create significant shareholder value and a more sustainable business for the future. We strongly believe a combined company would create more opportunities and provide more benefits for our collective customers, employees, shareholders and society in general.”

The US company confirmed it made a final attempt for engagement with Akzo several days ago via a letter, hoping the Dulux parent would consider a price increase and certain sweeteners for the proposed deal. In the letter, PPG said it addressed the concerns raised by Akzo around value, certainty, timing and stakeholder considerations under the takeover bid, and provided “additional and specific commitments and assurances including a significant break-fee and an offer to negotiate a nominal price increase as part of an agreed transaction.”

Mr McGarry added: “However, AkzoNobel’s boards have consistently refused to engage and did not respond to our call or letter. As a result, we believe it is in the best interests of PPG and its shareholders to withdraw our proposal to AkzoNobel at this time.

Under Dutch takeover rules, PPG had to submit an offer memorandium for Akzo Nobel by June 1 or walk away for at least six months. The company had unsuccessfully filed for an extension to that deadline with the Dutch Authority for the Financial Markets (AFM) this week. When its request was rejected by the AFM, PPG said it would “continue to assess all of its options” before announcing today that it would not be submitting a revised offer

Mr McGarry stated that PPG remains, “focused on identifying growth opportunities that will drive value and strengthen our company” and went on to thank stakeholders in the Netherlands “who were open to and welcomed the opportunity to learn about the possibilities that a business combination could provide”.  

In response to PPG’s announcement that it has withdrawn its proposal, Akzo Nobel CEO Ton Büchner said: “We continue to focus on our business, pursuing our strategy of accelerating sustainable growth and profitability and creating two focused, high-performing businesses - Paints and Coatings and Specialty Chemicals. We believe this will lead to a step change in growth and long-term value creation for our shareholders and all other stakeholders. 

"Our talented teams around the world continue to develop, produce and deliver the most innovative and sustainable products and services for our customers, and I would like to thank all colleagues for their ongoing commitment. We reiterate our commitment to maintain an open and constructive dialog with our shareholders and all other stakeholders."