Akzo Nobel NV, battling an unwanted $24 billion approach from PPG Industries Inc., will carve out its chemicals division and return 1.6 billion euros ($1.7 billion) to shareholders in a move Chief Executive Officer Ton Buechner said is more profitable
than a takeover of the centuries-old paintmaker.
The separation of chemicals will be carried out within 12 months and the “vast majority” of net proceeds will be returned to investors, the Amsterdam-based company said on Wednesday. The payout for this year will include a 1 billion-euro special dividend as well as a 50 percent rise in the regular one.
“This is the better plan,” Buechner said in an interview with Bloomberg TV, adding that it creates significantly less risk and superior value. “Other plans would actually have significant time required for regulatory approval.”
Buechner is detailing his strategy and new financial targets at an investor day in London and could find it a tough sell. The 51-year-old Dutch national needs to convince those shareholders urging him to engage with PPG instead. Akzo Nobel has twice rejected its Pittsburgh-based rival, saying the latest 88.72-euro proposal without the dividend is too low. Buechner’s earnings goals could lift Akzo’s share price to 93 euros, according to Bernstein.
“These financial targets are a huge stretch,” Bernstein analyst Jeremy Redenius said by phone. “Buechner will have a huge challenge at the investor day to show how they get there.”
The Dutch company said on Wednesday it will run a dual-track process for the separation of the specialty chemicals business to consider a listed entity or a sale.