Dutch economic affairs minister Henk Kamp has repeated his opposition to a takeover of paint maker Akzo Nobel, saying he did not care that US rival, the automotive coatings maker PPG Industries, had raised its offer.
“Whether the offer is low or high, that doesn’t change my opinion,” Kamp said in an interview with BNR radio, according to Reuters.
“For the Dutch (economy), it’s good that the leadership of Akzo Nobel, both the management board and the supervisory board, is planning to remain independent, and I support that.”
Reuters noted Akzo had said it was studying PPG’s latest proposal, which values the company at around EUR26.9bn (US$28.8bn).
In a proposal letter to Antony Burgmans, chairman of AkzoNobel’s supervisory board and Ton Büchner, chief executive officer and management board chairman, PPG detailed its increased offer of EUR96.75 per ordinary share of AkzoNobel, comprised of cash of EUR61.50 and 0.357 shares of PPG stock.
In the letter, PPG chairman and chief executive officer Michael McGarry said: “We are extending this one last invitation to you and the AkzoNobel boards to reconsider your stance and to engage with us on creating extraordinary value and benefits for all of AkzoNobel’s stakeholders.
“Our revised proposal represents a second increase in price along with significant and highly specific commitments that we are confident AkzoNobel’s stakeholders will find compelling. We stand ready to work with you expeditiously to complete a targeted due diligence review and to negotiate a definitive agreement for the combination.”
PPG’s latest per share offer is 8% over its 22 March revised offer and 17% over its original offer of 2 March.
PPG said it “believes its revised proposal is vastly superior to AkzoNobel’s new standalone plan, as articulated on 19 April. As evidenced by the decline in AkzoNobel’s stock price since its investor update, the capital markets have not recognised any additional value from its new standalone plan, including the enhanced regular dividend and special dividend that AkzoNobel has proposed for 2017.
“One of the more notable risks of AkzoNobel’s new standalone plan is that it creates two smaller, unproven standalone companies with uncertain market valuations and substantial risks for reaching its 2020 guidance, especially given many of the annual targets that AkzoNobel has identified have not been achieved previously. AkzoNobel’s standalone plan also will require substantial restructuring; potentially decreases free cash flow, putting future and accelerated growth plans of the demerged companies at risk; and could require a regulatory review that would extend the timeline and create uncertainty.
“PPG believes the long-term value creation from a combination of the two companies will be significant for shareholders of both companies, including the benefits of annual synergies of at least $750m, which PPG has estimated based on publicly available information.”
The PPG letter offers or reiterates a number of deal sweeteners and says it “will not relocate any of AkzoNobel’s production facilities in Europe to the US”, adding: “Local suppliers to AkzoNobel in the Netherlands and UK will be given a full and fair opportunity to sell to the larger, combined new company.
“PPG strongly believes that the future of AkzoNobel’s employees in a combined company will be more secure, with many exciting opportunities for future growth, than under AkzoNobel’s new plan which includes a separation of the speciality chemicals business,” PPG added.
“PPG is willing to commit that no AkzoNobel employee currently working in a Netherlands speciality chemicals plant will lose their job as direct result of this acquisition.”