Bloomberg
May 11, 2017
There’s a 75% Chance PPG Walks Away From Akzo Nobel: Survey
Source: Bloomberg Terminal NSN OPSDO66K50XT <GO>
By William Canny
(Bloomberg) -- There is a ~75% chance of PPG walking away from its attempt to buy Dutch peer Akzo Nobel, according to a Bloomberg survey.
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Of 24 M&A/event driven desks, analysts, fund managers and brokers surveyed, 18 said PPG would walk away from its current attempt to buy Akzo, 6 said that PPG would not
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PPG CEO Michael McGarry had said April 24 that he planned to make a hostile bid if PPG’s most recent offer was spurned. Akzo has now rejected three approaches from PPG
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However yesterday, PPG said it was considering whether to drop its pursuit of Akzo, suggesting for the first time that it may end its attempts at a takeover
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June 1 is deadline under Dutch law for PPG to make a tender offer to Akzo shareholders
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Akzo shares gain 0.5%, PPG closed unchanged yesterday at $107.85
ANALYST QUOTES:
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Louis Capital risk-arbitrage analyst Ben Kelly says PPG tends to be extremely disciplined
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Says they have made a decent offer, paying up again would just be bidding against themselves and there doesn’t seem to be any upside to that
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Says the most prudent option would be to walk away; they could then come back when the chemicals business has been split out
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North Square Blue Oak analyst Mario Russo says PPG’s latest offer represents fastest way to unlock value for Akzo shareholders
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The alternative is to wait for the spin-off of the specialty chemicals business to happen, and for the market to recognize its value, which could take up to 2 years
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Akzo’s largest shareholders will want the chance to monetize their investment by accepting PPG’s offer
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Adds that sector consolidation is only a matter of time, Akzo’s coatings business is mature, last five years of sales’ compound annual growth rate is unchanged whereas margins have improved
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RELATED
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May 11: Dutch Investor Group VEB Urges Akzo to Enter Talks With PPG
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May 10: Akzo Investors Beware: Dutch Hostile Deals Have Low Success Rate
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--With assistance from Gaurav Panchal.
To contact the reporter on this story:
William Canny in London at wcanny3@bloomberg.net
To contact the editor responsible for this story:
Celeste Perri at cperri@bloomberg.net