Published: Fri, March 10, 2017
Technology | By Ramiro Moody

AkzoNobel nixes unsolicited $21.98B PPG offer

AkzoNobel nixes unsolicited $21.98B PPG offer

Paints and chemicals company Akzo Nobel has rejected an unsolicited, non-binding offer by the PPG Industries to acquire all issued and outstanding ordinary shares in the company.

Netherlands-listed Akzo Nobel NV said PPG Industries Inc.'s unsolicited bid is undervalues the company, would be hard to close and features a financing plan that contains too much leverage. The Dutch company said the offer undervalues it and that the terms of the deal are problematic as they would include high debt. In 2016, the unit generated sales of Euros 4.8 billion or $5.5 billion.

The rhetoric in AkzoNobel's robust rejection of the bid resembles that of Anglo-Dutch consumer goods group Unilever when it slammed Kraft Heinz's £115 billion approach last month.

PPG had offered about $87.15 a share for AkzoNobel.

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PPG Industries, Inc. has a market capital of 25991.16 at the moment and a profit to earnings ratio of 47.79. Now the USA company is returning with an offer for the rest. Akzo said Thursday it will review options for the business, including a spinoff. (NYSE:PPG) during the fourth quarter, according to its most recent 13F filing with the Securities and Exchange Commission (SEC).

"Any future proposition is pure speculation", the CEO said. Akzo Nobel explained that PPG takeover proposal substantially undervalued Akzo Nobel and was not in the interest of its shareholder, customers and employees. In any case, the expected synergies from a combination would be compromised by antitrust demands, he added.

After years of cost reductions and improving margins to industry standards, there's a "strong rationale" for creating two focused businesses, Buechner said, and Akzo's performance last year showed the time was right to contemplate separating specialty chemicals.

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