PPG has yet to make a formal statement, but AkzoNobel has publicly rejected the offer with CEO Ton Büchner making the following statement:
The unsolicited proposal we received from PPG substantially undervalues our company and contains serious risks and uncertainties. The proposal is not in the interest of AkzoNobel’s stakeholders, including its shareholders, customers and employees, and we have unanimously rejected it. Along with my colleagues on our Boards, our executive team and our thousands of employees, I firmly believe that AkzoNobel is best placed to unlock the value within our company ourselves.
Both stocks nevertheless responded positively to the news; AKZOY opened up 13% this morning with PPG having closed up 6% yesterday.
AkzoNobel accelerated the review of its Speciality Chemicals business which it implied would have happened anyway. The business had revenues of €6.8 billion in 2016 and various options are being considered for it, including a public listing.
Regarding the takeover offer, Bernstein analyst Jeremy Redenius said:
We think a combination is credible and potentially powerful. The logic and deal could be strikingly similar to the potential Praxair-Linde merger. A deal would combine the number 1 and 2 globally in a market that is still relatively fragmented.
He added that a deal would most likely have few antitrust barriers and could bring combined cost savings of $600 million.
Will the proposed spinoff of AkzoNobel Speciality Chemicals be enough to thwart the takeover? It might not need to be. With nationalist sentiment running high in The Netherlands at the moment (isn’t it everywhere?) there will likely be significant opposition to cross border takeover.
We expect to hear more in the coming days.
Disclosure: The author holds no position in any stock mentioned