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Shareholders piled pressure on Dutch paint maker Akzo Nobel to open talks with U.S. rival PPG Industries on Wednesday after Akzo rejected a revised 22.7 billion euro takeover offer as too low, too risky and a bad fit culturally.

With Akzo insisting that the interests of staff and investors were best served by its plan to spin off its chemicals division and remain independent, the Dutch Shareholders’ Association (VEB) said PPG should be given a hearing.

“The second offer addressed many of Akzo’s concerns about research and development, jobs and the firms’ cultures, so they should at least discuss it,” said Paul Koster, VEB’s director, echoing the views of several large institutional shareholders.

“It’s good to understand what’s happening so you can know if (a merger) might not be a good idea,” he added, suggesting that the terms of PPG’s offer meant any deal would effectively be a “merger of equals”.

PPG said its offer was worth 90 euros a share if Akzo’s dividend payments were included — the level at which one investor told Reuters a sale would become attractive.

“A price in the 90s would represent a chunky multiple and could be tempting,” one top 20 investor told Reuters. “At this price we would believe it is up to management to convince us not to sell.”

Pittsburgh-based PPG’s pursuit of Akzo has raised hackles at the paints and coatings maker, which, like many Dutch companies, is ringed with defenses designed to make hostile takeovers difficult.

“PPG’s first proposal came during an election campaign, at a time of high sensitivity,” said Akzo Chief Executive Ton Buechner in a media call earlier on Wednesday, highlighting cultural differences that he said would hamper a merger.

“LET’S TALK IT OVER”

Akzo rejected PPG’s second proposal as not good enough even to merit engaging with the bidder. PPG’s initial offer of 83 euros per share on March 9 valued the company at 21 billion euros.

In a nod to the political sensitivity of any deal, PPG said its cash and share offer would reflect the interests of “shareholders, employees, customers and the communities” served by Akzo and that regulatory approval could be obtained.

It said its offer was based on achieving annual synergies of at least $750 million.

PPG urged Akzo to negotiate, adding the latest bid offered a 40 percent premium compared to the price before the first approach was announced.

“We believe the revised proposal presents an opportunity for AkzoNobel’s shareholders to realize extraordinary value, by any measure, for their shares in AkzoNobel,” said PPG Chairman and CEO Michael McGarry.

Elliott Advisors, which has a more than 3 percent shareholding in Akzo, said that while it considered PPG’s first and second bids “inadequate”, Akzo had not adequately consulted shareholders before rejecting them.

Shareholder Columbia Threadneedle also said a takeover made sense and the Akzo board should engage in talks.

PPG said its bid valued Akzo’s equity at around 22.7 billion euros. Factoring in net debt and minority interests, it said the valuation was 24.5 billion euros ($26.3 billion).

Shares in the Dutch company, known for Dulux paint and advanced coatings that make submarines go faster, were down 1.2 percent at 75.6 euros at 1520 GMT after Akzo’s rejection. Akzo acquired the Dulux brand when it bought Britain’s ICI in 2008.

POLITICAL OPPOSITION

Dutch politicians including Economic Affairs Minister Henk Kamp publicly opposed PPG’s first bid, saying it was not in the Dutch national interest.

Four provincial governors also oppose a takeover, saying it would cost Dutch jobs. Akzo employed more than 45,000 people as of the end of 2015 and PPG has a similar workforce.

Politicians have voiced concerns about possible foreign takeovers of Dutch companies, especially after Kraft’s failed bid for totemic Anglo-Dutch consumer giant Unilever, where many of the country’s top business leaders trained.

However, VEB’s Koster said Dutch companies could not shut themselves away from the impact of open markets.

“I think we have to recognize we are an open economy dependent on exports. Dutch companies have also made a lot of takeovers in other countries,” he said.

However, some analysts said that PPG needed to work harder to win over all the parties, not just investors.

“Throwing money or getting an activist involved – that is trying to force the issue,” said Ben Gomes-Casseres, a management professor at Brandeis University in Massachusetts.

“They need to probably change their approach – that’s the bottom line. You can’t buy love.”

Source: Reuters