Activist fund rejects Dulux owner's plan to split in two

PPG Industries, the USA paints maker that has proposed a 24.6 billion euro (20.57 billion pounds) takeover of Dutch peer Akzo Nobel and been rejected, said on Wednesday it was not impressed with Akzo's alternative strategy.

The paint company PPG has offered to pay more than $24bn (£19bn) for the business. One equities research analyst has rated the stock with a sell rating, four have assigned a hold rating, two have issued a buy rating and one has issued a strong buy rating to the company.

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Akzo Nobel said, "The view of the Supervisory Board is that the removal of Mr. Burgmans would be irresponsible, disproportionate, damaging and not in the best interest of the Company, its shareholders and other stakeholders".

In an open letter on Monday, Pittsburgh-based chemicals manufacturer PPG ramped up the pressure on AkzoNobel, claiming its vision to stay independent was risky and would create less value than if the two companies combined. This strategy will create substantial value for shareholders with significant less risks and uncertainties compared to alternatives, ' chief executive Ton Büchner said.

Akzo Nobel NV has outlined a new strategy which will see its Specialty Chemicals unit separated into a new business unit and divested within 12 months.

Buechner said that the company may use proceeds of the spin-off to fund acquisitions, but the "vast majority" would be returned directly to shareholders. Akzo shares were little changed at 78.34 euros by 1425 GMT.

However, PPG countered by saying that its proposal would provide shareholders with an immediate cash payout that far exceeds Akzo's proposal.

Akzo, which bought the UK's ICI and its Dulux brand in 2008 for £8 billion and also owns Polyfilla, said the plans offered "superior, faster and more certain value creation" than being sold to America's PPG, which has a reputation for cutting jobs.

The firm expects a total of 200 million euros in annual savings resulting from ongoing improvement programs.

The Dulux paint maker chalked up a 13% rise in earnings to 376 million euros (£314 million) in the first quarter of this year, with revenues climbing 7% to 3.7 billion euros (£3.1 billion) over the period.

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