The battle for Dulux

Paints firm AkzoNobel has received a generous offer, and activists are urging a sale. So why is the firm standing firm? Ben Judge reports.

AkzoNobel, the Dutch maker of Dulux paint, is embroiled in a takeover battle with the US paints giant PPG, which makes Leyland and Johnstone’s paints in the UK. In early March, PPG approached Akzo with an offer of 83 per share, compared with Akzo’s share price of 65 at the time. Akzo’s board declined. PPG came back with an improved offer of 90, which was also knocked back. On Monday, PPG returned for a third time, offering
96.75 in cash and shares, saying, “We are extending this one last invitation to you… to reconsider your stance and to engage with us.”

Akzo’s chief executive, Ton Büchner, responded with a proposal to spin out the company’s speciality chemicals arm, pay a special dividend of 1bn and increase its regular payout by 50%. However, that hasn’t satisfied shareholders, who are putting Akzo’s management under pressure to engage with PPG. Activist hedge fund Elliott Management, which owns about 3.5% of the company, called Büchner’s strategy “too ambitious, incomplete and an attempt by senior managers to keep their jobs”, while PPG’s bid is “a bona fide proposal from a credible counterparty”. Threadneedle Asset Management agreed, saying that Akzo “has no more room for excuses and must enter into proper discussions with PPG”.

The battle for control is now “spinning into all-out war”, says Alex Brummer in the Daily Mail. Elliott, backed by shareholders holding about 17% of Akzo, has called for an extraordinary general meeting with the aim of getting rid of Akzo’s chairman, Antony Burgmans. But “if the atmosphere at the Akzo Nobel’s annual general meeting in Amsterdam is anything to go by, PPG faces formidable obstacles”. Elliott’s proposal was greeted with “stony silence”, while “the views of smaller investors, many of them worker shareholders, were met with tumultuous applause”.

Yet if Akzo has its shareholders’ interests at heart, it’s surely “time to talk”, says Chris Hughes on Bloomberg Gadfly. PPG’s bid price is “well above what would normally facilitate talks”, although Akzo might still be able to extract a higher price, perhaps “a clean 100 a share”. Indeed, PPG’s offer is generous enough that its own shareholders should be asking hard questions, says Olaf Storbeck on The cost savings that PPG expects have a present value of about 5.2bn, yet the latest offer represents an 8bn premium to Akzo’s share price before PPG’s first bid. “This deal needs more gloss.”

Britain’s ten most-hated shares

Company Sector Short interest on 25 April Short interest on 28 March
Carillion Construction 23.82% 21.50%
Wm Morrison Supermarkets 17.41% 17.45%
Ocado Supermarkets 17.04% 16.72%
Tullow Oil Oil and gas 16.36% 14.25%
Mitie Outsourcing 15.09% 15.23%
Debenhams General retailers 10.23% 10.07%
Telit Comm’s Telecoms equip. 9.67% 10.49%
Marks & Spencer General retailers 8.94% 8.13%
Ascent Res. Oil and gas 8.49% NEW ENTRY
NCC Group Software 8.08% NEW ENTRY


These are the ten most unpopular companies in the UK, based on the percentage of stock being shorted (the “short interest”). Short sellers aim to profit from falling prices, so it can be useful to see what they are betting against. The list can also be an indicator of stocks that might bounce strongly on unexpected good news when short sellers are forced out of their positions (a “short squeeze”). Investors are betting that the formerly high-flying cybersecurity business NCC Group is set to tumble further. The company’s shares fell by more than 30% in February after it issued a profit warning.

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