Akzo Nobel, the Dutch paint maker trying to fend off a 24.6 billion euro takeover by U.S. rival PPG Industries Inc, outline an alternative plan to separate its chemicals business and pay shareholders 1.6 billion euros in extra dividends this year. Ivor Bennett reports.
It's a brand many will know. But a company they may not. Dulux paint and its famous dog are owned by Akzo Nobel. A Dutch firm that's valued at 24.6 billion euros by US rival PPG. But Akzo still isn't interested. CEO Ton Buechner announcing a plan to separate its chemicals division instead as a means to remain independent. SOUNDBITE (English) TON BUECHNER, CEO, AKZO NOBEL, SAYING: "Both businesses have scale and capability to stand on their own and to deliver a strong cash generation in the future." The chemicals business counts for about a third of Akzo's profits. Spinning it off, it said, would save 50 million euros a year. While shareholders would get 1.6 billion euros in extra dividends this year. But many are thought to favour a takeover instead. SOUNDBITE (English) LAITH KHALAF, SENIOR ANALYST, HARGREAVES LANSDOWN, SAYING: "But the problem they have is that investors aren't really on side. Particularly activist investors. They want them to go and speak to PPG about the takeover target and perhaps flush out a better bid." It's the second time PPG 's been rejected. And some believe their offer will be hard to match. SOUNDBITE (English) LAITH KHALAF, SENIOR ANALYST, HARGREAVES LANSDOWN, SAYING: "US companies seem to be flexing their muscles at the moment. There's a stronger dollar which is obviously making for more tempting targets for takeovers overseas." But the plan comes off the back of strong earnings for Akzo. Q1 operating profits were up 13 percent to 376 million euros. And with 6 percent growth forecast for the year as a whole, the company's confident that now is not the time for a new paint job.