Amsterdam-based AkzoNobel, one of the worlds leading paints, coatings and chemicals companies announced, on March 9, 2017, a review of strategic options for the separation of its Specialty Chemicals business after rejecting a $22 billion unsolicited takeover bid from paints and coatings supplier PPG Industries.
The Specialty Chemicals business, which had revenues of 4.8 billion in 2016, is positioned with a broad portfolio of leading technologies and chemicals which service a wide range of end-user segments including construction, industrial and consumer goods. The company stated that the separation will allow the Specialty Chemicals business to continue to build and accelerate its market-leading positions across a range of market segments.
Akzonobel markets a diverse portfolio of chemistries applicable to the lubricant additives industry. The company's amide, amine and alkoxylated amine product lines of cationic surfactants have found wide application as friction modifiers, corrosion inhibitors, grease thickeners, detergents, emulsifiers and coupling agents. Additionally, the company's knowledge of fatty alkyls has allowed it to assemble an array of traditional ester chemistries. The main applications include friction modifiers, corrosion inhibitors, custom synthesis, emulsifiers, dispersants, detergents and oil-soluble polymers
As part of the separation, AkzoNobel said it will consider various alternative ownership structures for the Specialty Chemicals business including, but not limited to, the establishment of an independent listed entity. The ultimate structure will be determined by reference to shareholder value maximization as well as broader stakeholder considerations.
AkzoNobel said "The decision was brought forward following confirmation that AkzoNobel has rejected an unsolicited, non-binding and conditional proposal from PPG Industries Inc. for all of the issued and outstanding ordinary shares in the capital of AkzoNobel. PPGs proposal substantially undervalues AkzoNobel and is not in the interest of its stakeholders, including its shareholders, customers and employees.
Ton Büchner, CEO, AkzoNobel said Our Specialty Chemicals business is an industry leader in many of the markets in which it operates and we are extremely proud of its heritage, performance and people. We are reviewing strategic options to separate it from the company to create focus for both Specialty Chemicals and the Decorative Paints and Performance Coatings group, allowing them to build further on their respective leadership positions".
As stated at our full-year results announcement in February, we are now a leaner, more agile company with a solid financial and operational foundation and a focus on growth. AkzoNobel has enjoyed a record performance in recent years in terms of profitability and has made significant strategic progress, allowing us to take this decision.
Our decision today was brought forward due to recent events. The unsolicited proposal we received from PPG substantially undervalues our company and contains serious risks and uncertainties. The proposal is not in the interest of AkzoNobels stakeholders, including its shareholders, customers and employees, and we have unanimously rejected it. Along with my colleagues on our Boards, our executive team and our thousands of employees, I firmly believe that AkzoNobel is best placed to unlock the value within our company ourselves.
We understand our role in society and want to protect our ability to continue to invest in communities, research and development, innovation and sustainability in the countries in which we operate.
AkzoNobel confirmed it received an unsolicited, non-binding and conditional proposal from PPG for a public offer on all of the issued and outstanding ordinary shares in the capital of AkzoNobel at a price of 54.00 (US$57.53) in cash and 0.3 PPG shares per AkzoNobel share, corresponding to a value of 83.00 per share as per 28 February, 2017 (cum final dividend 2016).
The Board of Management and Supervisory Board of AkzoNobel have carefully reviewed and considered the proposal by PPG, together with their financial and legal advisors. In doing so, the Boards have taken into account the long-term interests of all AkzoNobel stakeholders, including the shareholders.
The Boards have unanimously concluded that the PPG proposal substantially undervalues AkzoNobel by failing to reflect the long-term value creation potential of the company. The Boards have also concluded that the equity component of the proposal has significant issues, including the high leverage of the proposed combination. They also believe the proposal carries significant delivery and timing risk for shareholders, both in relation to substantial anti-trust issues, pension schemes and the achievability of proposed synergies.
The Board of Management and the Supervisory Board of AkzoNobel also believe the proposal is not in the interest of stakeholders including its customers and employees. The proposal would be detrimental to the societies and economies in which AkzoNobel operates, including potentially jeopardizing the companys major contribution to communities and research & development organizations globally and its deep commitment to sustainability. The proposal is not in the interests of AkzoNobel employees and would create potential uncertainty for thousands of jobs worldwide.
AkzoNobel said it did not initiate nor has it encouraged or entertained any conversations with PPG on this matter.
