AMSTERDAM (Reuters) - Dutch paintmaker Akzo Nobel AKZO.AS, which angered investors by fending off a $32 billion takeover approach three months ago, warned on Friday it would not hit the 2017 profit target it promised during an acrimonious battle.
And in a further sign of the disarray at the top of the firm, Akzo said its finance chief has joined its previous CEO in stepping aside for health reasons, while the firm will now shake up its paints and industrial coatings businesses.
While Akzo chairman Antony Burgmans admitted his actions in the past months had damaged relationships with shareholders, he maintained that the company’s decisions have been correct.
“In retrospect, maybe I should have listened a bit better to shareholders, maybe I should have shown some more humility”, he told shareholders at an extraordinary meeting convened for Akzo to explain itself in more detail and restore good relations.
Friday's profit warning, which came just hours before the shareholder showdown in Amsterdam, raises more questions about the strategy Akzo adopted to thwart the 26 billion euro takeover proposal from U.S. rival PPG Industries PPG.N.
That rejection angered many Akzo shareholders, given that PPG’s offer of 95 euros per share was a 50 percent premium to the company’s share price in February.
The gap remains wide following the rejection and Akzo shares fell 0.8 percent on Friday to 77.98 euros at 1512 GMT, with the company insisting it is worth more.
“PPG offered hardly any premium compared to our value, based on our new strategic plans”, Akzo’s general counsel Sven Dumoulin said. “And major antitrust issues led to a significant risk that PPG would eventually walk away.”
Rather than be bought by PPG, Akzo proposed the sale of its Specialty Chemicals Division, which represents a third of the company’s sales and profit.
The architects of the defense are now gone or leaving soon.
Akzo said that Chief Financial Officer Maelys Castella would take a leave of absence for health reasons and return “in a senior management position” when she had recovered.
CEO Ton Buechner quit in July, also citing health reasons, and Burgmans, the focus of shareholder ire, has promised to retire in April 2018.
“It is extraordinary that these cases follow each other so rapidly, but it is purely coincidental,” Burgmans told reporters.
“The company remains in a state of flux and we eagerly await the retirement of the Chairman of the Supervisory Board,” John Bennett, head of European Equities at Janus Henderson, a top-20 investor in Akzo Nobel, said by e-mail.
Akzo said on Friday it will realign management along four geographical lines for paints and four product lines for industrial coatings.
And the maker of Dulux paint, citing cost inflation and currency factors, said it would not achieve a 100 million euro improvement in annual operating profit it promised in April.
New CEO Thierry Vanlancker said factors such as higher raw material costs were having “a wider and greater impact as the year continues” and Akzo was raising prices and cutting costs.
He also blamed temporary problems, including a fire at a Rotterdam refinery, the impact of Hurricane Harvey on supply chains, and low producer confidence in Britain after Brexit.
The industry will also feel longer-term impacts from greater environmental controls in China and a downturn in shipbuilding.
Kepler analyst Faitz said it is unlikely PPG will return to buy Akzo, given opposition by Dutch politicians and the Akzo Nobel Foundation, which holds poison pill defences.
“Anybody as head of that foundation who would give his okay to Akzo selling out would have to eventually leave the Netherlands under cover...” he said.
PPG aborted its efforts to buy Akzo in June and is barred from approaching it again before December. Burgmans on Friday declined to comment on how Akzo would react if PPG made a new offer.
Additional reporting by Anthony Deutsch and Simon Jessop; Editing by Jason Neely/Keith Weir/Alexander Smith
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