Akzo Nobel, the Dutch paint and chemicals company, on Monday rejected a merger offer from its American rival PPG Industries for the third time since early March, saying it preferred to go it alone.
The rejection of the latest bid, which valued Akzo Nobel at 24.6 billion euros, or about $27 billion, could set up a potential hostile takeover fight for the company, which makes Dulux paint.
PPG, which is based in Pittsburgh, called the offer “one last invitation” for Akzo Nobel to engage in merger discussions. The company has said it would make a public offer for Akzo Nobel and submit a draft offer memorandum to Dutch regulators by June 1.
Akzo Nobel had declined to engage in discussions but said it did meet with Michael McGarry, the PPG chairman and chief executive, and Hugh Grant, PPG’s lead independent director, before rejecting the latest offer.
“After extensive consideration, the company has concluded that the interests of shareholders and other stakeholders are best served by its own strategy to accelerate growth and value creation,” Akzo Nobel said in a news release on Monday.
“The extensive review and the meeting with PPG confirmed to Akzo Nobel that its own strategy is better and does not contain the risks and uncertainties inherent in PPG’s proposal,” the company added.
Akzo Nobel, based in Amsterdam, is one of the world’s largest makers of paints and coatings, employing 45,000 people in about 80 countries. It reported revenue of €14.2 billion last year.
Since PPG made its first approach in March, Akzo Nobel has focused on reviewing its plans as a stand-alone company, including potentially spinning off its specialty chemicals arm, which had €4.8 billion in revenue last year.
As part of a strategy update in April, the company said it would return as much as €1.6 billion to investors through dividends, and it increased its financial guidance for 2020. It said it would seek to spin off the specialty chemicals business within 12 months.
The latest rejection is not likely to sit well with Elliott Management, the American hedge fund founded by the billionaire Paul E. Singer.
Elliott has been pressuring Akzo Nobel to take part in takeover talks and called for a special meeting to replace Akzo Nobel’s chairman, Antony Burgmans.
Akzo Nobel rejected the Elliott push for a special meeting, saying that the request to replace Mr. Burgmans “is irresponsible, disproportionate, damaging and not in the best interests of the company.”
On Monday, Akzo Nobel said that it believed the latest offer still undervalued the company, faced “complex and lengthy regulatory hurdles” and did not “adequately address the uncertainties and risks” for its shareholders.
Akzo Nobel also noted that PPG, which owns the Glidden, Olympic and Pittsburgh Paints brands, had not undertaken an acquisition of this size and “is unproven in terms of an integration challenge as complex as the one proposed.”
The latest cash-and-share offer was worth €96.75 a share, including a final dividend to Akzo Nobel shareholders. That represented a 50 percent premium on Akzo Nobel’s closing share price before the initial offer was made public on March 9, PPG said.
Akzo Nobel’s shares closed at €79.40 on Friday.
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