Activist hedge fund Elliott Advisors was unimpressed by AkzoNobel’s scheme to win over shareholders this morning.
The Dutch paints company, which makes Dulux, today set out plans to return €1.6bn (£1.3bn) and spin off its chemical business. The firm also raised its earnings targets and guidance for 2020.
The changes have been prompted by shareholder pressure, led by Elliott, on the company for refusing to enter discussions with US rival PPG Industries, which last month made two unsolicited takeover offers.
Elliott, which yesterday launched a microsite for its campaign, http://www.valuecreationatakzo.com, remains unimpressed. It said in a statement this afternoon that the “certainty of the value in PPG’s bid far outweighs the uncertainty and risk attached to AkzoNobel achieving [its] forecasts”.
The investor added: “AkzoNobel’s stock continues to languish at a price that is significantly discounted to the €90 per share cum dividend bid price from PPG, which indicates the market’s scepticism that Akzo Nobel’s new plan and guidance can create more shareholder value than PPG’s bid. This is a scepticism which Elliott shares.”
Elliott was also critical of a statement from Akzo’s chairman, Antony Burgmans, whose future it believes should be voted on at an extraordinary general meeting (EGM), and again called for the company to engage in talks with PPG.
“As they have not engaged with PPG, AkzoNobel’s management board and supervisory board cannot objectively evaluate the benefits of a standalone strategy versus a potential friendly, negotiated transaction with PPG,” Elliott said. “The strategic review presented today is therefore incomplete.”
Despite Elliott not being satisfied, the Akzo shake-up has been seen as a win for the activist, shortly after a US campaign prompted the resignation of Klaus Kleinfeld, the chief executive of US metals firm Arconic.
Russ Mould, investment director at AJ Bell, said the move indicated Akzo had “responded to pressure from Elliott”.