AkzoNobel buries hatchet with shareholder over PPG takeover

Dutch paintmaker AkzoNobel said Wednesday it has buried the hatchet with a key shareholder in a long-running spat over a planned takeover by US-based chemical giant PPG.

But the pressure remains on AkzoNobel to prove to investors that their restructuring strategy is superior to PPG's takeover plan, analysts said.

US activist investor Elliott Advisors, which holds a stake of some 9.5 percent in AkzoNobel, is in favour of a tie-up with main US rival PPG that would create a new global leader in paints.

"Activist" investors purchase sizeable stakes in a company to put pressure on management to change strategy, rather than simply pocket dividend payouts.

And Elliott has been angered by the Dutch group's rejection of three different multi-billion-euro takeover offers from PPG, accusing it of "losing the trust of shareholders" and creating "a crisis of confidence" in the company's management.

Among a number of legal filings to try to force AkzoNobel's hand in the planned takeover by PPG -- which would have valued it at 26.9 billion euros ($30 billion) -- Elliott has sought to call an extraordinary shareholders meeting to oust the Dutch company's chairman Antony Burgmans.

But that attempt was foiled earlier this month when a Dutch court nixed Elliott's plans.

- 'Constructive dialogue' -

However, the two sides have now decided to call a truce, AkzoNobel said Wednesday.

It has "reached an agreement with... Elliott following recent constructive dialogue with the aim of normalising the relationship with its shareholders," the Amsterdam-based group said in a statement.

"AkzoNobel and Elliott have also agreed, subject to the terms of a standstill agreement, to seek to suspend all ongoing litigation for at least three months," AkzoNobel said.

The US investor will now support AkzoNobel's plans to spin off its speciality chemicals business and appoint Thierry Vanlancker as new chief executive to replace Ton Buchner, who is stepping down for health reasons, the group continued.

Shareholders will vote on Vanlancker's appointment at an extraordinary general meeting on September 8.

AkzoNobel said in April that it would shed its speciality chemicals arm as part of its strategy to ward off PPG's takeover bid.

- Keeping up the heat -

Joost van Beek, an analyst at private bank Theodoor Gilissen, said AkzoNobel's challenge now was "to show... that they are indeed able to improve operating margins and that they are able to get a nice price for the speciality chemicals division."

Van Beek added: "I expect they (Elliott) will continue to be very active in terms of putting pressure on Akzo, because there is still a huge difference between the share price of AkzoNobel and the intended price by PPG."

Chairman Burgmans said he was "pleased our recent constructive discussions with Elliott improved understanding between both parties."

Gordon Singer, chief executive of Elliott Advisors (UK), said the corporate cease-fire "marks an important next step in positioning AkzoNobel for success and enabling it to deliver compelling value to all stakeholders."

PPG dropped a third takeover bid for AkzoNobel in early June and is now legally subjected to a six-month cooling off period before any new attempt.

Analyst Van Beek said PPG would likely adopt "a wait-and-see attitude right now and they will certainly look at what chances and opportunities are in it for them."

Investors appeared to welcome the latest development and AkzoNobel shares were showing a gain of around 1.0 percent on the Amsterdam exchange on Wednesday, while the overall market was up by around 0.5 percent in early afternoon trade.

Source: AFP