In a letter to AkzoNobel shareholders released today, PPG Industries chairman and CEO Michael McGarry has restated his company’s commitment to negotiating a merger with AkzoNobel and addressed some criticisms of PPG’s offer to buy its Dutch rival.
We are not a U.S. business, but a global business, with a significant presence in every major region of the world,” McGarry says. PPG has five locations in the Netherlands with around 1,000 employees, according to the letter.
AkzoNobel has argued that PPG’s bid undervalues the company and that it could result in job losses. Dutch politicians have also expressed concerns that a PPG takeover could threaten jobs in the Netherlands.
PPG notes that local production is common in the coatings industry because of the nature of the product. “Since we produce paint, a product that doesn’t ship economically over long distances, we will continue to have local plants and employees in the regions where our paint is consumed,” McGarry says.
McGarry’s letter also notes that PPG “engaged in a private discussion with AkzoNobel about the possibility of combining the two companies” in late 2013. AkzoNobel was “not interested” at the time, the letter says, and remained so when McGarry met with AkzoNobel CEO Ton Büchner in March of this year. AkzoNobel went public with the rejection the following week. The company did so “without ever seeking to discuss and engage with us,” McGarry says. “Only after publicly rejecting our private offer did AkzoNobel change its strategic course.”
PPG’s latest offer values AkzoNobel at €90/share ($96/share), or about €22.4 billion. Some AkzoNobel shareholders have urged the company to engage with PPG, but management has thus far resisted the idea. AkzoNobel will offer details on the proposed separation of its specialty chemicals business at an investor update on Wednesday.
By Vincent Valk
Source: Chemical Week
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