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LONDON — Akzo Nobel, the Dutch paint and chemicals company that makes Dulux paint, said on Wednesday that it had rejected a second takeover bid from PPG Industries, turning away a $24 billion deal that would have created an industry behemoth.
However, Elliott Management, an American hedge fund with a stake in Akzo Nobel, called on the company to engage with PPG and explore a sale at a higher price, and also suggested it would support efforts to replace the company’s board if it failed to do so.
Akzo Nobel, which also produces Eka bleaching solutions and Interpon powder coatings, said that the second unsolicited offer from PPG still “substantially undervalues” it and is not in the best interests of shareholders. It also said there was a “significant culture gap” between the companies.
The latest bid came nearly two weeks after PPG, which is based in Pittsburgh, offered to acquire Akzo Nobel for $22 billion in the hope of creating a giant in the paint and chemical industry.
The offer also came against a backdrop of increasing concern in the Netherlands about foreign buyers acquiring Dutch companies. Before the general election in the Netherlands last week, politicians expressed worries about the vulnerability of companies to takeovers.
Last month, Kraft Heinz sought to buy Unilever, the British-Dutch maker of Dove soap, Ben & Jerry’s ice cream and Hellmann’s mayonnaise, but it quickly withdrew its $143 billion offer amid a brewing public backlash.
“We are convinced that Akzo Nobel is best placed to unlock the value within our company ourselves,” Ton Buchner, the company’s chief executive, said in a news release. “We are executing our plan, including the creation of two focused businesses and new cost structure, and believe this gives us a strong platform for continued profitability and long-term value creation for all our stakeholders with substantially less execution risks.”
The offer valued Akzo Nobel at 22.4 billion euros, or about $24 billion. Investors would have received €56.22 in cash and 0.331 of a PPG share for each share of Akzo Nobel, equivalent to €88.72 a share.
PPG separately said that its offer was worth €90 a share, including a final dividend to Akzo Nobel shareholders. The company said the offer represented a 40 percent premium to Akzo Nobel’s closing share price before its offer was made public on March 9. Including the assumption of debt, PPG said that its offer would value Akzo Nobel at €24.5 billion, or about $26.4 billion.
“We look forward to the opportunity to engage in dialogue with Akzo Nobel leadership, members of its supervisory board and other stakeholders to further discuss the merits of this revised proposal, negotiate a transaction and work together towards an agreement on mutually acceptable terms,” Michael McGarry, the PPG chairman and chief executive, said in a news release.
Akzo Nobel shares fell about 2 percent in afternoon trading in Amsterdam on Wednesday.
The company, based in Amsterdam, is one of the world’s largest makers of paints and coatings, employing 45,000 people in about 80 countries. It reported revenue of €14.2 billion last year.
Akzo Nobel said that its supervisory and management boards had thoroughly reviewed the second proposal and had unanimously rejected it.
“The proposal not only fails to reflect the current and future value of Akzo Nobel, it also neglects to address the significant uncertainties and risks for shareholders and other stakeholders,” the company said.
Akzo Nobel said that the latest proposal would have led to substantial divestitures because of “major geographical and segment overlap” and significant job cuts.
The company said that the unsolicited proposal “does not warrant Akzo Nobel’s engagement with PPG.”
But Elliott Management, which owns about 3 percent of Akzo Nobel, said on Wednesday that it did not think that Akzo Nobel had adequately consulted shareholders before rejecting the PPG bids.
Elliott said it considered the second proposal by PPG to be “inadequate,” but it urged Akzo Nobel to hold talks with its rival.
“It is only through engagement that Akzo Nobel can determine if PPG is prepared to bid at a level that provides adequate consideration to shareholders,” Elliott said in a news release.
Elliott also said that it thought investors representing 10 percent or more of Akzo Nobel’s capital could call for a special meeting to potentially remove the board and that it would consider remedies, including potentially seeking a special meeting, if Akzo Nobel failed to engage with PPG.
After the first offer from PPG this month, Akzo Nobel said it would consider spinning off its specialty chemicals arm, which had €4.8 billion in revenue last year.
An earlier version of this article misspelled, on first reference, the name of a hedge fund with a stake in Akzo Nobel. The hedge fund is Elliott Management, not Elliot Management.
