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Akzo Nobel explores sale, merger with peer: sources
March 8, 2017 / 7:16 PM / in 8 months

Akzo Nobel explores sale, merger with peer: sources

(Reuters) - Dutch paint maker Akzo Nobel NV (AKZO.AS) is exploring a sale or merger with a peer, and is in talks with companies including U.S. coatings manufacturer PPG Industries Inc (PPG.N), people familiar with the matter said on Wednesday.

The sign of AkzoNobel is pictured at its headquarters in Amsterdam February 6, 2014. REUTERS/Toussaint Kluiters/United Photos

The merger discussions come as the Netherlands is set to hold a national election on March 15. The takeover of the country’s biggest companies by foreign rivals has emerged as a political issue and the government of Prime Minister Mark Rutte has proposed more scrutiny over such takeovers.

The sources cautioned that Akzo Nobel may not agree to any deal, and asked not to be identified because the matter is confidential. PPG declined to comment, while Akzo Nobel did not immediately respond to a request for comment.

Bloomberg News reported earlier that PPG was exploring a potential deal with Akzo Nobel.

PPG shares were up 7 percent at $107.69 in afternoon trading in New York on Wednesday, giving the company a market capitalization of $28 billion. Akzo shares ended trading in Amsterdam almost flat, before the news broke, at 64.42 euros, giving the company a market capitalization of 16 billion euros ($17 billion).

Dutch Finance Minister Jeroen Dijsselbloem said earlier this week that the government should set up a panel with the power to block takeovers by foreign companies that were contrary to the national interest.

Many Dutch companies already enjoy strong takeover defenses. However, U.S. food giant Kraft Heinz Co’s (KHC.O) bid for Anglo-Dutch peer Unilever NV (UNc.AS) became a political issue in the Netherlands, as the far-right party of Geert Wilders stirs up nationalist sentiment. Many Dutch politicians argued that the fact that many of the country’s companies are flush with cash made them vulnerable as takeover targets.

Akzo Nobel, whose brands include Dulux paint, fell short of analyst estimates regarding its earnings in the last three months of 2016, as the marine and energy sectors weighed, while restructuring costs also put pressure on results.

PPG said in December it would launch a global restructuring program, targeting $125 million in annual savings. It also said it would cut 1,700 jobs, about 3.6 percent of its global workforce.

Reporting by Pamela Barbaglia in London; Editing by Susan Fenton and Frances Kerry

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