Business Concentrates MERGERS & ACQUISITIONS
PPG plans next move after AkzoNobel rebuff Paint maker is joined by AkzoNobel’s own shareholders, who want the firm to negotiate Paint giant PPG Industries is weighing its options now that AkzoNobel has rejected its third takeover proposal. PPG hasn’t said whether it will pursue a hostile bid—no easy task when a Dutch firm is the target.
in cash and stock. It also promised to pay AkzoNobel a “significant” fee should antitrust regulators block the deal because of the overlap in the two firms’ core paint businesses. The offer led to a May 6 meeting involving AkzoNobel executive chair Ton Büchner, AkzoNobel supervisory board chair Antony Burgmans, PPG CEO Michael McGarry, and PPG lead independent director Hugh Grant, who is also CEO of Monsanto. AkzoNobel had previously refused to discuss a deal with PPG. On the basis of the meeting and its own review of the proposal, AkzoNobel claims the bid undervalues the company. AkzoNobel also worries about the 18 months of regulatory review the deal would likely require and the uncertainty AkzoNobel says it is concerned about the impact the combination would create for of a merger on its workers. its 46,000 workers. The May 6 meeting has become But it is open to further talks with AkzoNoa bone of contention. In a statement, PPG bel’s management. complains that it was less than 90 minutes On May 8, AkzoNobel rejected PPG’s long and more of a listening session for the latest acquisition offer, saying it intends AkzoNobel managers than a back-and-forth to move forward with its own plan to sell discussion. “Specifically, the AkzoNobel or spin off its chemical business within 12 chairs stated up front that they did not have months. the intent nor the authority to negotiate,” PPG’s offer was valued at $28.8 billion PPG says.
Confronted about PPG’s assertions, Büchner told reporters on a conference call that the gathering was part of its evaluation process. “We went into the meeting with an open mind,” he said. In a follow-up statement, PPG invited AkzoNobel to more talks. “The remaining questions raised by AkzoNobel are common negotiation points and can be quickly and reasonably resolved through an open, substantive, two-way dialogue in which both parties are motivated and engaged,” McGarry wrote. “AkzoNobel, however, has chosen not to engage in meaningful discussions.” A hostile takeover of AkzoNobel would be tough. Like many Dutch companies, it has a “stichting,” a foundation of people who hold a special class of shares. These shareholders can appoint AkzoNobel’s management and supervisory boards over the objection of regular shareholders, many of whom want the firm to negotiate. The most outspoken shareholder, the hedge fund Elliott Advisors, has filed a petition with a Dutch court of appeals seeking an extraordinary general meeting where shareholders could vote to oust Burgmans. Citing the brevity of the meeting between the two firms, Elliott argues that AkzoNobel isn’t performing its fiduciary duty to evaluate the deal. The meeting, it says, “was conducted for the sole purpose of being able to claim to have ‘met’ and ‘engaged’ with the relevant party.”—ALEX
TULLO
INVESTMENT
At its annual shareholders meeting last week, Dow Chemical announced a fiveyear, $4 billion round of investments on the U.S. Gulf Coast and beyond. The company will add two furnaces at an ethylene cracker set to open later this year in Freeport, Texas. The additional equipment will expand the cracker’s capacity by one-third to 2 million metric tons per year, making it the largest ethylene plant in the world, Dow says. The company will also build a 600,000-metric-ton polyethylene plant on the Gulf Coast. Improvement projects at
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C&EN | CEN.ACS.ORG | MAY 15, 2017
existing plants, mostly in North America, will yield another 350,000 metric tons of polyethylene capacity. Dow is also building a 450,000-metric-ton polyolefins plant in Europe to serve the high-pressure pipe market. It will be the first new polyolefins plant Western Europe has seen since the late 2000s. In recent years, capital spending in petrochemicals has favored lower-cost regions such as North America—with feedstock derived from shale gas—and the Middle East. Some $400 million will be directed to Dow’s Midland, Mich., manufacturing op-
erations to enhance integration with the Dow Corning silicones business, which Dow took over last year. Dow also intends to build a catalyst plant to support its Univation polyethylene licensing business. Dow has a lot on its plate. It expects its merger with DuPont to close in August, to be followed within 18 months by a breakup into three separate firms. One of the firms, a materials science company with headquarters in Midland, will operate the petrochemical and plastics business where Dow is making most of the investments.—ALEX TULLO
CREDIT: AKZONOBEL
Dow unveils $4 billion in new projects
