US vultures demanding the takeover of Dulux have rejected a £1.3 billion sweetener being offered to shareholders.
Activist New York hedge fund Elliott Advisors has reinforced its calls for Akzo Nobel, the parent company of Dulux, to enter talks with American rival PPG.
It came despite Akzo, at a meeting in London yesterday, offering changes to boost returns for investors.
Shelved: US vultures demanding the takeover of Dulux have rejected a £1.3 billion sweetener being offered to shareholders
Akzo has been fending off criticism from shareholders over its refusal to discuss a deal with the American predator and unveiled an ambitious turnaround strategy that was supposed to put shareholder concerns to bed.
The Dutch firm, which took over British giant ICI in 2008, revealed it would separate its chemicals business from its UK paints arm, increase its financial guidance for the year and dish out £1.3 billion of dividends.
But the move failed to quell rebel shareholder Elliott, which is run by 72-year-old billionaire Paul Singer and has a track record of aggressively pushing for takeovers in a bid to maximise profits on its stakes in companies. It said Akzo’s offers would be fruitless so long as it refuses to engage with PPG.
The move didn’t seem to win over other investors either, with only one of the five shareholders who had called for an extraordinary general meeting (EGM) understood to be pleased with the offer.
Fresh lick of paint: Akzo, which took over British giant ICI in 2008, revealed it would separate its chemicals business from its UK paints arm and dish out £1.3 billion of dividends
It is the latest development in the ongoing dispute between the two firms since Akzo rejected a £19.3 billion PPG bid last month and an earlier £18.1 billion bid, saying many jobs would be lost.
The bids sparked fears over the future of 3,300 Akzo staff in the UK – in the north-east, Glasgow, Suffolk, the Midlands and Slough. Elliott said Akzo’s new growth strategy was ‘questionable’ and added the firm ‘could not possibly know’ what shareholders would make from its plans without engaging with PPG.
It disputed claims that it could save jobs, saying Akzo’s record of axing 12,000 posts between 2009 to 2014 ‘speaks for itself’.
It also said Akzo’s move to increase operating profit by £209 million by 2020 was a long way off.
It added: ‘Akzo seems to imply that management’s ‘proven track record’ is positive, however, according to Akzo Nobel’s own calculations, the company has ranked towards the bottom of its self-defined peer group in delivering shareholder returns.’
Akzo is planning to sell or list its chemicals business within 12 months. Valued at £6.7 billion, it accounts for about a third of sales and profits.
The firm also said it plans to cut costs by £167 million in 2017. Ton Buchner, chief executive, said the strategy would create ‘substantial value’ for shareholders but refused to comment on job losses, saying some investors had responded positively to the plan.
Elliott, which owns just over 3 per cent of Akzo Nobel, last week revealed it had won the support of five other shareholders to call an EGM to oust Akzo chairman Antony Burgmans.
Analysts and investors have been largely sceptical of whether Akzo’s alternative plan can rival PPG’s offer. Pittsburgh-based PPG rubbished Akzo’s proposals.
Akzo shares nudged up 0.3 per cent, or 21 cents, to €78.50, suggesting the market – at the very least – believes the saga is far from over.