PPG Ups Tikkurila Bid, AkzoNobel Drops Out


The brief bidding war between global coatings companies PPG and AkzoNobel for Finnish decorative coatings company Tikkurila has come to an end.

Late last week, PPG upped its bid to acquire the company, which was followed by AkzoNobel’s withdrawal from the process.

What Happened

On Feb. 4, both PPG and Tikkurila announced that they had come to an amended agreement that came with a total transaction value of approximately 1.52 billion euros (about $1.83 billion). In this offer, Tikkurila shareholders would receive 34 euros for each share.

Based on this offer, certain majority shareholders of Tikkurila (about 29.34%) have unconditionally agreed to sell their shares to the Pittsburgh-based company.

In its announcement, PPG listed several other terms and conditions of its proposal, and directly compared them to AkzoNobel’s, including:

  • A premium of 8.8% compared to the competing offer from AkzoNobel, maximizing value for all of Tikkurila’s shareholders;
  • Expected closing as early as March or early in the second quarter of 2021;
  • Regulatory process progressing in line with expected closing date, which represents a significantly quicker timeline than the transaction proposed by AkzoNobel and enabling closing ahead of Tikkurila’s annual peak season in the second and third quarters;
  • Enhanced deal certainty by lowering the tender acceptance threshold from 90% to 66.7% and providing certain additional regulatory undertakings; and
  • A far more certain and attractive future for Tikkurila’s business, employees, and stakeholders by preserving the company in its entirety, without the disruption and dislocation of divestitures possibly including certain Tikkurila businesses, regulatory uncertainty and the extended timeline required by AkzoNobel’s proposal.

“From a strategic and shareholder value creation perspective, an acquisition of Tikkurila remains an attractive opportunity for PPG. Our improved offer reflects further analysis of the potential transaction synergies and the confidence we have in the value that can be realized by joining our two companies,” said Michael McGarry, PPG chairman and chief executive officer.

“We appreciate the assessment of Tikkurila’s Board of Directors, in light of its fiduciary duty and its fair consideration of both offers. They properly concluded that PPG’s improved offer is clearly superior, can be completed more quickly, is significantly less complex and more certain and is in the best interest of Tikkurila and all of its stakeholders, especially considering its employees. We look forward to bringing Tikkurila and PPG together as a combined company for the benefit of our customers, employees, and communities early this year.”

About four days later, AkzoNobel announced that it no longer intends to pursue Tikkurila, adding: “Despite a strong cultural fit—and more synergies than any other combination with Tikkurila—the intended transaction no longer meets AkzoNobel’s criteria for superior value creation.”

The company noted that it will continue to focus on its growth and delivery strategy.

“We have clear priorities and criteria for capital allocation, including investing for growth, paying dividends, conducting acquisitions, and carrying out share buybacks,” said Thierry Vanlancker, CEO of AkzoNobel.

“The intended acquisition of Tikkurila can no longer compete with more attractive opportunities to create superior value for our shareholders and other stakeholders. Executing with discipline has been key to AkzoNobel’s transformation into a company with higher profitability and strong free cash flow. This is working well for us and part of who we are.”

Bidding Background

AkzoNobel’s offer was originally publicized on Jan. 18 and includes an all-cash public offer for all issued and outstanding shares of Tikkurila at an offer price of 31.25 euros per share. At the time, Tikkurila had already entered into an agreement with PPG.

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.

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.


Late last week, PPG upped its bid to acquire the company, which was followed by AkzoNobel’s withdrawal from the process.

“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 did not publicly comment on AkzoNobel’s bid announcements.

Then, at the end of January, AkzoNobel made its official binding proposal to Tikkurila’s Board, representing a total equity value of about 1.4 billion euros ($1.7 billion), a counter offer to PPG’s 1.24 billion euros ($1.5 billion).

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 19, 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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