AkzoNobel and Axalta both announced today that they have halted discussions about a potential merger.
“The companies were unable to reach mutually agreeable terms,” Axalta says in a statement. The two coatings makers disclosed the existence of talks on 30 October, after reports appeared in the Wall Street Journal.
AkzoNobel is “focused on our strategic options to continue to develop our business and improve profitability in the future,” says CEO Thierry Vanlancker. Axalta “concluded we could not negotiate a transaction on terms that meet our criteria,” says chairman and CEO Charles Shaver. Those criteria include generating greater shareholder value than the company’s plans would as an independent entity, he adds.
The prospective merger was also seen as an attempt by AkzoNobel to fend off a renewed bid by PPG Industries, whose hostile bid for AkzoNobel was rebuffed in the spring. An AkzoNobel-Axalta transaction is “a plausible move, with attractive synergies and a good strategic fit, but the timing suggests the AkzoNobel board wants to block off any possibility of losing its independence,” Laurence Alexander, an analyst with Jefferies (New York), said when the rumors appeared.
Under Dutch law, PPG may launch a new bid for AkzoNobel in December. However, it is not clear that PPG intends to resume its pursuit of AkzoNobel. Statements from PPG executives, as well as analyst speculation, hint that a new bid is unlikely, at least for now. During PPG’s quarterly earnings call on 19 October, chairman and CEO Michael McGarry told investors that “we have moved on” from the merger proposal. “We are happy with our acquisition pipeline,” McGarry added.
“If PPG is posturing regarding lack of interest in re-engaging with Akzo, they are doing an excellent job of it,” says Kevin McCarthy, an analyst with Vertical Research Partners (Stamford, CT). “We detect near zero willingness to re-engage with Akzo at this juncture given the intransigence demonstrated by Akzo’s board.”
By Vincent Valk
Sourc: Chemical Week
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