PPG, Akzo Nobel, Haggle Over Acquisition
PPG, originally rebuffed in its attempt to acquire AkzoNobel, has reiterated its invitation to AkzoNobel to explore its proposal to form a combined company. PPG states that it continues to believe that a combination of the two companies has a strong strategic rationale and also that it presents a highly compelling and unique opportunity for both of them.
PPG, the world’s largest coatings company, made an initial offer of about $22 billion to buy its largest competitor in early March. Dutch company AkzoNobel refused the proposal outright, saying it undervalued the company and did not take into account a number of intangibles. Less than two weeks later, PPG returned with a $26 billion offer, which was also declined.
AkzoNobel has said that both offers from PPG failed to address several major concerns, including that the acquisition as proposed would require “a large number of substantial divestitures due to the major geographical and segment overlap of both companies across decorative paints and performance coatings, bringing into question value leakage.”
The Dutch company also voiced concerns about research and development, sustainability efforts, community contribution and a “significant culture gap” between the companies.
“We made a compelling offer to AkzoNobel that provides its shareholders with a significant premium and the opportunity to benefit from the upside potential of a stronger company that is well positioned for future growth and value creation,” said Michael McGarry, PPG Chairman and CEO. “Together, we can create a stronger company that will benefit all of AkzoNobel’s stakeholders, including its Netherlands-based employees,”
Although AkzoNobel has declined PPG’s invitations to meet, PPG stated that it remains committed to seeking engagement with AkzoNobel and believes AkzoNobel should honor growing requests to engage and fully consider all relevant options to create the most value for all of its stakeholders, as well as benefit from the multiple months of preparation already completed by PPG.
“The feedback we have received in the Netherlands, the U.K. and the U.S. further validates the merits of combining PPG and AkzoNobel,” McGarry said. “We are now even more convinced that this is in the best interests of all stakeholders of AkzoNobel.”
PPG has stated its commitment to address several areas of importance previously identified by AkzoNobel, such as continuing commitments to research and development, honoring existing employment terms of employees and social plans, locating key businesses in Europe and in the Netherlands, maintaining important public-private partnerships, and further strengthening community investments and commitments to sustainability and social responsibility.
PPG calls the two companies a “strong cultural fit” with a “history of strong performance” and “commitment to employees, research and development, and community.”
New Value for True Value
True Value Company, one of the world’s largest retailer-owned hardware cooperatives, reported total gross billings up 2.0 percent ($40.5 million) compared to the prior year. Revenue was an increase of 1.1 percent ($16.9 million).
Total retail comparable store sales were up 2.5 percent with increases across eleven of the twelve regions in the country and six of nine merchandise categories, led by Farm & Ranch, Auto, Pet, Lawn & Garden, and Paint.
“True Value is two years into executing a plan that will serve our retailers’ needs and ensure their long-term growth and profitability, making them relevant for generations to come,” said President and CEO John Hartmann. “We have broken a nearly decade-long trend of negative net new sales growth. For the past three years, the sales volume from our new stores has exceeded sales from terminated stores.”