The future of AkzoNobel

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Media Reports  |  Feedback from stakeholders  |  Experts


Media reports

Financial Times Lex Column, May 8:
“Akzo does have an alternative plan ready. It plans to sell or spin off its specialty chemicals division, which should leave a standalone coatings group trading at a higher multiple of profits, and be quicker to execute than a merger.

The Guardian, 8 May
“So congratulations are due to AkzoNobel…It has dismissed US rival PPG’s latest takeover pitch…and told the bidder, more or less, to take its chances with a hostile offer or shut up and go away. It has done so with a flourish, citing four grounds for refusal, from the value of the offer to PPG’s “lack of cultural understanding”

The Times, 9 May:
 “The single largest issue in this stand-off is the competition overlap in so many jurisdictions. A hostile takeover situation would render the chances of voluntary anti-trust remedies impossible. AkzoNobel may well win the war.”

Daily Mail, 9 May:
“The PPG offer could be bogged down by competition investigations across the globe for up to a year. PPG's promise of future cash doesn't make a lot of sense.”

Reuters, May 8:
“Opposition from [AkzoNobel’s] boards, Dutch politicians and many of its Dutch staff present difficulties PPG will have to weigh.”

EenVandaag, 29 April:

Daily Mail, 26 April:
“To applause from employees and small shareholders, boss Ton Büchner said that the business could be strong as a standalone company and would stand by its employees, many of whom protested the takeover bid outside the meeting.”

The Times, 20 April:
“Mr Büchner is probably right that his action plan is a quicker and more deliverable route to value than a takeover destined to be picked apart by competition regulators.”

Lex, Financial Times, 20 April:
“Managers highlighted investment plans in both areas of its business. And it is not as if PPG's proposal, which relies on the traditional takeover formula of big cost savings financing a bid premium and (hopefully) feeding through into higher returns in the long term, is any more imaginative.”

The Daily Telegraph, 20 April:
“On that note, should ‘fast money’ activists also be the ones to pressure national ‘champions’ into capitulation?”

Telegraaf, 20 April:
Analysts responded predominantly positive and increased the target price for the AkzoNobel share. AkzoNobel was further supported by excellent Q1 results.

Financieele Dagblad, 19 April:
Martin Dunwoodie (Deutsche Bank) argues the new guidance is very welcome, and so is the boost in dividends. It is explained that the new financial targets, in combination with a successful sale of the Specialty Chemicals division could potentially bring the share up to €100.

IEX, 19 April:
"AkzoNobel has formulated a solid ambition", says Joost van Beek (Theodoor Gilissen) and a remarkably positive update. ING published that Q1 results were strong. Both profit and revenue were higher than researchers had been anticipating.

BNR, 19 April:
“At first sight, the PPG proposal seems rather opportunistic”, says Marieke Bax (Senior Board Member) “Make it clear what the disadvantages of the PPG proposal are for AkzoNobel. This uncertainty is disastrous for a company. The anti-trust implications following the PPG offer are enormous. Shareholders loathe this. So the best defense is to really focus on the implications of the proposal.”

Reuters Breakingviews, 19 April:
“On paper, this go-at-it-alone strategy could be superior… As a pure-play paint and coatings maker, Akzo may also shed the conglomerate discount relative to more focused rivals, which trade at higher multiples. If it can fetch a valuation similar to PPG, this can lift the value to around €93 per Akzo share.”

Reuters Breakingviews, 19 April:
True, reducing complexity by selling specialty chemicals will help. Buechner expects the transaction will lower annual costs by €50 million.

DFT Telegraaf TV, 19 April:
“What AkzoNobel has done very well is to scheme a quick and aggressive plan for shareholders to be able to cash quickly…it could be very difficult for PPG to make any successful proposal before June 1”

NOS, 19 April:
“We don’t know what the implications of the new strategy will be for jobs in the long run but PPG has not indicated at all what it wants to do with Akzo. Employees are left in the dark, says Arthur Bot (CNV). “We are not dealing with philanthropists here.” 

NOS, 19 April:
Akzo had no choice but to present its own plans in order to shake off PPG. “Either way, jobs are at stake but we have a preference for a company under a Dutch flag” says FNV-executive Erik de Vries.

BNR, 19 April:
Sjoerd Vollebregt (SB Chairman of Heijmans) calls it a robust plan from a company that wants to specialize and has clear space to return value including to shareholders.

Bloomberg Gadfly, 19 April:
“The path outlined by Akzo CEO Ton Büchner suggests he could deliver comparable value over the coming 12 months -- if everything goes right.”

Press Association, 19 April:
“AkzoNobel has beaten expectations with record profits and unveiled plans to overhaul the business as it continues to bat away a takeover attempt from a US rival.”

Bloomberg, 19 April:
"The increase in financial guidance is much more substantial than I had expected.” (Joost van Beek of Theodoor Gilissen Bankiers) 

Feedback from stakeholders

Maarten Hijink, member of the Socialist Party (reported by Volkskrant, May 18):
“Listed companies like KPN, AkzoNobel and Philips wouldn’t have been worth a lot without an active government and without the ongoing support of employees. We should fight for the long term interest of the company. A company is more than just a moneymaker.”

Henk Kamp, Dutch Economic Affairs Minister (reported by ANP, May 8):
“Minister Henk Kamp is happy with the “powerful attitude” displayed by AkzoNobel during the takeover battle with the American company PPG. “Just like other Dutch multinationals, AkzoNobel is of huge importance for the country. The Netherlands has grown to become of the most competitive economies in the world and I’d like to keep it that way.” Kamp responded to AkzoNobel’s rejection of PPG’s third proposal. “The company’s management has looked at long-term shareholder interests as well as interests of employees, customers and suppliers”.

Henk Kamp, Dutch Economic Affairs Minister (reported on BNR, April 25):
"Whether the offer is low or high doesn't change my opinion. For the Dutch (economy), it's good that the leadership of AkzoNobel, both the management board and the supervisory board, is planning to remain independent, and I support that."

Steven Leijenaar, Chairman of the AkzoNobel Works Council (reported on NOS, April 25):
“There are a lot of worries amongst colleagues about a possible takeover.  People are concerned for their own jobs. PPG says they offer job guarantees, but we haven’t heard that. We heard an intention of job guarantees, not an actual guarantee.

Experts

Adrian de Groot Ruiz, executive director at True Price, and Dirk Schoenmaker, professor finance at the Rotterdam School of Management (reported by De Volkskrant, May 24):
“The solution for this problem would be to introduce a societal test via corporate law: take overs should only take place if they don’t cause any damage to society. This used to be difficult to measure, but nowadays this is possible through the Societal Profit & Loss analysis.

In the case of AkzoNobel-PPG first we made an estimation of the societal effects of an acquisition for shareholders, employees, consumers and the environment. The effects for shareholders are very unpredictable, but on average they don’t profit from large acquisitions. Employees and consumers can experience strong negative effects: take-overs on average lead to loss of jobs and increased prices.

Also the environment will potentially suffer. At this moment AkzoNobel has a strong focus on sustainability. If there results would fall back to the level of PPG, the societal cost for CO2 emissions go up to billions of euros. The cost of these four effects is expected to be around 6 billion euro’s.”
 
Huub Willems, professor corporate litigation at the University of Groningen and former chairman of the enterprise chamber (reported by Het Financieele Dagblad, May 18):
“The works council can play an important role in takeover battles of listed companies. It is very possible that if the works council of ABN Amro had played a part in that case (takeover of ABN Amro) the outcome could have been very different.”

Raymond James, 21 April:
We see few downside risks at these levels, with PPG still eager to push forward (we continue to believe that the bid will be unsuccessful), while we now have a detailed strategic plan that could potentially deliver a similar upside.”

Citi, 20 April:
Management have put forward a compelling argument, backed with a clear intent to deliver on ambitious targets

Soc Gen, 20 April:
With PPG prowling, Akzo delivered a strong 1Q beat, issued FY guidance ahead of consensus. Akzo has moved to performance excellence, the effects of which had yet to become fully visible.

JP Morgan, 20 April:
Management’s track record on delivering in restructuring and margin improvement in recent years has been commendable.