Akzo could face investor revolt for blocking talks

Dutch paint maker AkzoNobel could face a shareholder revolt if it continues to avoid a meeting with PPG Industries to discuss a possible takeover by the US company, PPG Chief Executive Michael McGarry said.
McGarry said he had been approached by “virtually all” of Akzo’s 20 largest shareholders after PPG proposed a 24.5 billion euro ($26.1 billion) takeover deal. None of them were opposed to the idea, he said.
“I think shareholders are dismayed at being placed last in all (Akzo’s) stakeholder conversations,” he said in an interview.
PPG said separately last week it was ready to address Akzo’s non-financial objections to its proposal.
Akzo on Tuesday repeated its opposition to a deal with the US paints and coatings maker. It has said PPG’s proposal undervalues its business, would run into difficulty with competition regulators and be bad for employees.
Many Akzo shareholders have urged the company’s management to enter discussions. No major shareholder has come forward to oppose the idea.
In its statement, PPG said it was ready to address many of Akzo’s concerns, including commitments to funding research and development, fair employment terms, equitable locations of divisional headquarters, and spending on community investment and sustainability targets.
“They’re afraid if they sit down with us, we’re going to address their concerns and they’ll have no more legitimate” objections to the merger, McGarry said.
In a response, Akzo repeated PPG’s proposals were “unacceptable.”
“Let’s not get caught up in other issues around the proposal such as engagement (with PPG),” the Dutch firm said.
“We remain firmly focused on developing our exciting plans for the future of AkzoNobel to unlock significant value for shareholders and all stakeholders, which we will present on April 19.”
Akzo has said it prefers to sell its chemicals division, representing about a third of company sales and profits, and remain independent, rather than entering talks.
Analysts say Akzo’s plan is unlikely to deliver as much value to shareholders as PPG’s proposed cash and share offer, worth 90 euros per share at current prices.
“How are they going to look their own stakeholders and employees in the eyes and say ‘we think this is best’.” McGarry said. “Someone is going to say: How would you know, because you’ve never sat down with PPG.”
Akzo shares closed up around 1.5 per cent at 79.10 euros, suggesting some investors doubt PPG will ultimately succeed.
Under Dutch stock exchange rules, PPG must submit a formal draft offer by June 1 or drop its pursuit for six months.
 — Reuters