AMSTERDAM: Dutch paints and chemicals maker Akzo Nobel NV said Thursday it had rejected a EUR20.9 billion ($22.1 billion) offer from U.S. peer PPG Industries Inc., setting up a trans-Atlantic standoff between two long-lived industrial giants amid a wave of consolidation in the sector.
Amsterdam-based Akzo also said Thursday that it is exploring selling off its special-chemicals division — a disclosure, it said, prompted by PPG’s unsolicited offer.
Akzo said PPG a week ago offered EUR54 in cash and 0.3 PPG shares for each Akzo share, corresponding to a value of EUR83 a share. Akzo shares increased 13% to EUR72.79 in Thursday trading, while PPG dropped 3.7% to $102.93.
There have been dealings between the two companies before. In 2012, PPG bought Akzo’s North American house-paint business for $1.05 billion, an acquisition that PPG Chief Executive Michael McGarry helped engineer before being promoted to the top spot at the Pittsburgh-based company in 2015.
Akzo, which counts Dulux, Sikkens, Interpon and Eka among its brands, said the bid significantly undervalues the company and that its board unanimously rejected it after a careful review.
PPG, whose brands include Pittsburgh Paints, Olympic and Glidden, confirmed the proposal, saying it continues to believe in the strategic rationale for the deal and that it would now consider its next steps. It said a combination would bring together complementary products and technologies, as well as strengths in different parts of the world.
In December, PPG launched a restructuring program in an effort to save $120 million to $130 million a year because of a slowdown in global demand and weaker-than-expected growth in Europe.
For 2016, PPG recorded net sales of $14.8 billion, flat with the preceding year. Akzo’s revenue fell 4% to EUR14.2 billion.
The offer comes amid a period of consolidation in the chemicals industry. U.S. giants Dow Chemical Co. and DuPont Co. are in the process of completing a $120 billion merger, and have offered to sell businesses to gain approval from the European Union’s antitrust regulator.
Akzo became one of the world’s largest paint makers after it acquired U.K. rival Imperial Chemical Industries Ltd. in 2008 for GBP8 billion ($12.9 billion). But the Dutch company struggled to digest the debt-financed acquisition, which raised its exposure to Europe’s troubled automotive and construction industries, culminating in a series of profit warnings in 2011. It has since slashed costs and laid off staff.
