Exclusive: Akzo sees latest PPG bid inadequate, weighs options

Tue May 2, 2017 1:14pm EDT
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By Greg Roumeliotis

(Reuters) - Dutch paint maker Akzo Nobel NV's (AKZO.AS: Quote) supervisory board is scheduled to meet on Tuesday to discuss how to proceed after deeming PPG Industries Inc's (PPG.N: Quote) latest $29 billion offer to be insufficient, people familiar with the matter said.

Akzo believes that PPG's third acquisition bid, which was unveiled on April 24, still does not value the company highly enough, especially in light of Akzo's plans to unlock value by exploring a spin-off or sale of its specialty chemicals business, and the risks it sees in the potential deal, the sources said.

However, Akzo is studying several scenarios about how to move forward, mindful that several of its shareholders want it to engage with PPG in negotiations. Activist hedge fund Elliott Advisors has been trying to oust Akzo's Chairman Antony Burgmans to put pressure on the company to talk to PPG.

Among the options being considered by Akzo is talking to PPG only about some of the issues that would affect the deal, such as antitrust approval risk, or rejecting it outright without any engagement, the sources said.

This is because Akzo is concerned that engaging with PPG in comprehensive deal negotiations would weigh on its prospects of getting PPG to improve on its offer much more, according to the sources.

No timeline has been set for Akzo's response to PPG, the sources said, asking not to be identified because the deliberations are confidential.

Akzo and PPG did not immediately respond to requests for comment.

PPG said last week its latest acquisition proposal was worth 96.75 euros per Akzo share, comprised of 61.50 euros in cash, 0.357 shares of PPG common stock and dividends worth 7.78 euros.   Continued...

Cans of Dulux paint, an Akzo Nobel brand, are seen on the shelves of a hardware store near Manchester, Britain, April 24, 2017. REUTERS/Phil Noble