AkzoNobel Bids Against Tikkurila, PPG Deal


Global coatings company AkzoNobel has reportedly made a counterbid to acquire Finnish decorative coatings company Tikkurila, which has already entered into an agreement with PPG.

AkzoNobel’s offer, which was publicized on Jan. 18, includes an all-cash public offer for all issued and outstanding shares of Tikkurila at an offer price of 31.25 euros per share and total equity value of around 1.4 billion euros (about $1.7 billion).

PPG’s offer is currently valued at 1.24 billion euros ($1.5 billion).

Tikkurila was established in 1862 and is headquartered in Vantaa, Finland. The decorative paint company has operations in 11 countries, with 80% of its revenue coming from Finland, Sweden, Russia, Poland and the Baltic states.

Tikkurila’s industrial paint business includes wood and protective coatings end-use segments, among others. The company employs approximately 2,700 people and reported sales of approximately 564 million euros in 2019.

What’s Happening

PPG initially announced the agreement with Tikkurila in December, at the time offering 1.1 billion euros ($1.35 billion).

“The combination of PPG and Tikkurila is extremely complementary, both geographically and from a decorative brand perspective,” said Michael McGarry, PPG Chairman and Chief Executive Officer, at the time. “We have long admired Tikkurila’s rich history of establishing very strong decorative brands and product offerings in several northern and eastern European countries where PPG has minimal decorative presence.”

Then, on Jan. 5, PPG upped its offer to the $1.5 billion, after Tikkurila revealed that it had received a competing offer from Hempel.

A little more than a week later, AkzoNobel unveiled its own bid of the $1.7 billion and am invitation to Tikkurila’s Board of Directors to enter negotiations. The company also made it a point to echo Hempel’s key terms for the sale of assets, including the decorative paints business of AkzoNobel in the Nordics and the Baltics, to be completed after closing.

“The natural combination of AkzoNobel and Tikkurila would build on centuries of industry experience and a shared European heritage to create significant value for customers, employees, shareholders and other stakeholders,” said AkzoNobel CEO Thierry Vanlancker. “Bringing together our premium brands and leading portfolios would provide customers with a wider range of innovative products and services, including the most sustainable paints and coatings solutions.”

Tikkurila responded with a statement that it would take AkzoNobel’s offer into consideration, while PPG would also get an opportunity to again raise its bid.

PPG has yet to publicly comment on the deal since AkzoNobel announced its bid.

PPG, AkzoNobel Saga

A back-and-forth between PPG and AkzoNobel is nothing new, as much of 2017 was spent with PPG vying for a merger between the two companies.

The merger bid began March 8 of that year, when PPG made a private, unsolicited bid of about $22 billion for the acquisition of AkzoNobel, which, given the size of the players involved, would likely have amounted to a merger-of-equals. One day later, AkzoNobel rejected the bid out of hand in a public statement, saying it undervalued the company and contained “serious risks and uncertainties.”

After the first bid, AkzoNobel also said it was preparing a plan to spin off its Specialty Chemicals business (now known as Nouryon), as an alternative way to spur growth in the company.

Two weeks later, on March 22, PPG made its second bid, worth about $26.3 billion. AkzoNobel again publicly denied the offer, raising concerns about divestitures that could be required, the lengthy regulatory approval process and what it called a “significant culture gap” between the companies.

On April 7, PPG, which had previously pursued the merger through private communication with AkzoNobel executives, made a public plea to the company to come to the table for talks. Not long after, activist hedge fund Elliott Advisers called for a meeting of AkzoNobel shareholders on the topic of removing Antony Burgmans, the company's board chair. AkzoNobel responded by calling for PPG to clarify its relationship with Elliott. The Dutch company would later deny the meeting request.

On April 20, AkzoNobel detailed its plan to split off its Specialty Chemicals business, and announced what it called “record profitability” in the first quarter of 2017. The company said it would reap 50 million euros in savings by separating the unit off.

On April 24, PPG publicly released a letter to AkzoNobel, detailing its third and final offer, which the company said it would consider. On May 8, AkzoNobel announced it had rejected the bid. PPG refuted AkzoNobel’s claims that the two companies had met to discuss the offer.

PPG officials said that AkzoNobel called a last-minute meeting in Rotterdam on less than 24 hours’ notice, and that officials refused to negotiate. PPG said the refusal to negotiate represented a “continued lack of proper governance” at AkzoNobel.

In May, PPG said that its proposal still stood, and that it was considering its next move. Some shareholders attempted to get AkzoNobel to the bargaining table: Fund manager Tweedy, Browne Company LLC wrote a letter to the company’s supervisory board criticizing its inaction, and Elliott Advisers moved to try to remove Burgmans via a legal challenge.

At that point, some speculated that PPG would attempt a hostile takeover of the Dutch firm, but on June 1, PPG dropped the monthslong endeavor.

“We were hopeful throughout this process that AkzoNobel’s boards would see the merits of our compelling proposal to combine our two great companies and create significant shareholder value and a more sustainable business for the future,” said McGarry at the time. “We strongly believe a combined company would create more opportunities and provide more benefits for our collective customers, employees, shareholders and society in general.”

AkzoNobel, meanwhile, responded with: “Our talented teams around the world continue to develop, produce and deliver the most innovative and sustainable products and services for our customers, and I would like to thank all colleagues for their ongoing commitment. We reiterate our commitment to maintain an open and constructive dialog with our shareholders and all other stakeholders.”


Tagged categories: Acquisitions; AkzoNobel; Asia Pacific; Business matters; EMEA (Europe, Middle East and Africa); Good Technical Practice; Latin America; Mergers; North America; PPG; Tikkurila; Z-Continents

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