PPG improves its pitch to combine with AkzoNobel
PPG has advised AkzoNobel that there are clear paths to regulatory approval based on the broad, complementary geographic footprint of the businesses, and AkzoNobel has rejected PPG's proposal that the companies' antitrust experts meet to confirm approach.
PPG yesterday announced that it made a revised proposal on 20 March 2017 to acquire AkzoNobel for US$97.10 (cum dividend) per ordinary share, comprised of cash of US$62.05 and 0.331 share of PPG common stock.
This represents an increase of US$7.56 per ordinary share from PPG’s initial offer. Including the assumption of net debt and minority interests, the proposed transaction is valued at approximately US$26.44 billion.
PPG was informed yesterday that AkzoNobel rejected this latest proposal. To date, the boards of AkzoNobel have not accepted PPG’s multiple invitations to discuss its proposals and negotiate a recommended transaction.
PPG believes this revised proposal strengthens a very attractive and highly compelling opportunity for both AkzoNobel and PPG, their respective shareholders and other stakeholders, and comprehensively addresses all relevant non-financial matters. PPG continues to believe strongly that a combination of the two companies presents a unique opportunity to build on the heritage and legacies of the respective businesses, and that the combination is in the best interest of both companies’ shareholders and other stakeholders.
Michael McGarry, chairman and CEO, PPG, said, “We believe the revised proposal presents an opportunity for AkzoNobel’s shareholders to realise extraordinary value, by any measure, for their shares in AkzoNobel. It provides them with a premium valuation and the opportunity to receive substantial and immediate cash consideration and participate in the success of the enterprise through ownership of shares in the combined company.”
The US$97.10 (cum dividend) per ordinary share proposal would provide a 40 percent premium to AkzoNobel shareholders based on AkzoNobel’s unaffected closing stock price of US$69.52 on 8 March 2017, and is 39 percent above AkzoNobel’s 52-week high stock price prior to disclosure of PPG’s earlier proposal. The acquisition is expected to be immediately accretive to PPG’s earnings per share, excluding expected one-time transaction related costs, and value enhancing to PPG’s shareholders. PPG’s revised proposal provides a premium valuation for all of AkzoNobel as presently constituted, including the coatings businesses and the specialty chemical business.
PPG’s revised proposal reflects annual run rate synergies of at least US$750 million, which could be achieved from a combination of the two companies. A substantial portion of these synergies relate to raw material purchasing, supply-chain management and optimising distribution networks based upon PPG’s experience in acquiring AkzoNobel’s North American decorative coatings business.
“A combination of PPG and AkzoNobel would result in enhanced financial growth prospects for the combined company in the coming years, which will also accrue to the benefit of all stakeholders of the combined business,” McGarry observed. “PPG has continued to carefully consider the interests of all AkzoNobel stakeholders, including shareholders, employees, customers and the communities it serves. We look forward to the opportunity to engage in dialogue with AkzoNobel leadership, members of its supervisory board and other stakeholders to further discuss the merits of this revised proposal, negotiate a transaction and work together towards an agreement on mutually acceptable terms. We are respectful of the questions and concerns that have been raised and look forward to addressing these in a collaborative manner,” added McGarry.
“We are hopeful that AkzoNobel engages with us promptly in order to further discuss and explore the benefits of a combination for its stakeholders, including substantial commitments regarding employees in The Netherlands, research and development, and sustainability,” concluded McGarry.