Dutch paints company AkzoNobel today encouraged investors by saying it would “carefully review and consider” a new takeover offer from US rival PPG Industries.
PPG yesterday announced it had increased its offer for the Dulux maker, which has its AGM tomorrow, by around eight per cent to €26.9bn (£22.8bn), or €96.75 per share. Akzo’s shares closed up five per cent at €81.93.
Coming after Akzo rejected two other offers last month, PPG also indicated this represented “one last invitation… to reconsider your stance and to engage with us”.
Elliott Advisors, a top-five Akzo investor that has been pressuring the firm to engage in talks with PPG, said the offer “clearly warrants sincere engagement”. The hedge fund also interpreted the “last invitation” statement as meaning that PPG would no longer be prepared to hold “friendly discussions” if the latest bid is rejected.
Elliott said: “There can be no assurance that a hostile bid – if one were to materialise – would include the same or improved protections and undertakings for AkzoNobel stakeholders.
“Elliott therefore believes that friendly discussions now are in the best interest of all stakeholders.”
In an attempt to address Akzo concerns over regulation, the latest PPG offer includes a break fee for if the deal is blocked.
In a letter to AkzoNobel’s chairman Antony Burgmans and chief executive Ton Buchner, PPG boss Michael McGarry said:
We are extending this one last invitation to you and the AkzoNobel boards to reconsider your stance and to engage with us on creating extraordinary value and benefits for all of AkzoNobel’s stakeholders.
Our revised proposal represents a second increase in price along with significant and highly-specific commitments that we are confident AkzoNobel’s stakeholders will find compelling. We stand ready to work with you expeditiously to complete a targeted due diligence review and to negotiate a definitive agreement for the combination.
The offer would comprise €61.50 per share in cash, and 0.357 shares of common PPG stock. The offer is up eight per cent on the previous offer and 17 per cent on the first. PPG said it represented a 24 per cent premium on Akzo’s closing share price last week, €78.20.
Akzo’s share price jumped six per cent after the announcement, resting at €82.69 at the time of writing.