James HesterUS paints and coatings giant PPG has thrown in the towel after a three-month battle to gain control of Dutch rival AkzoNobel.
PPG claimed it had decided to withdraw the $27bn bid for Akzo as the latter´s board had refused to discuss its latest overtures.
The US group backed away from its earlier threat to take the offer directly to Akzo shareholders.
No response
PPG chief executive Michael McGarry said it had made a final approach to Akzo last week, but had not received a response.
“AkzoNobel’s boards have consistently refused to engage and did not respond to our call or letter. As a result, we believe it is in the best interests of PPG and its shareholders to withdraw our proposal to AkzoNobel at this time,” said McGarry.
McGarry also insisted that the deal would have been in both companies´ interests creating “significant shareholder value and a more sustainable business for the future”.
Persistent offers
PPG made three offers for PPG during the past few months, the last of which valued the company at around $27bn.
While AkzoNobel shares surged by around 19% when the takeover approach emerged, the shares ended the session little changed on news that PPG had given up its pursuit.
PPG shares, however, rallied 2.6%, suggesting some shareholders in the US company may in fact be relieved that the deal is off the table for now.
Under Dutch takeover rules PPG is prevented from making a fresh Akzo bid for six months.
Shareholder support
The proposed merged was supported by Akzo institutional shareholders such as Elliott Advisors. However, in an echo of the opposition to Kraft Heinz’s hastily withdrawn $143bn bid for Anglo-Dutch consumer group Unilever earlier this year, the PPG approach met with fierce political hostility.
For its part, Akzo complained that the bid was too low and that PPG did not fully understand Akzo´s brands, which include Dulux paints.
In April, Akzo presented a defence to the proposed merger, pledging to spin off its chemicals arm and increase the dividend.