Dutch defenses easily thwart flaky paint crashers
BREAKINGVIEWS-Dutch defenses easily thwart flaky paint crashers The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Jennifer Johnson
LONDON, June 3 (Reuters Breakingviews) - Paint M&A interlopers Nippon Paint 4612.T and Sherwin-Williams SHW.N threw an offer for rival AkzoNobel AKZO.AS at the wall – and it didn’t stick. On Wednesday, they formally walked away from their €12.5 billion cash proposal, which would have seen the target’s assets broken up and divided between the two suitors. Meanwhile, Netherlands-based AkzoNobel remained adamant that it wants to see through its planned merger with U.S. rival Axalta AXTA.N. Dutch governance quirks can make corporate raids tricky at the best of times, so the deal crashers needed a knockout offer.
At €73 per share, the Nippon/Sherwin bid constituted a not-insignificant 40% premium to AkzoNobel’s closing share price of €52.52 on May 26. Some investors seemed keen on the prospect of a cash offer – with the stock climbing by around 20% after the attempt was made public. AkzoNobel’s board, however, believed the price “did not come close” to adequately reflecting its value, especially once the Axalta deal is completed. The group reckons the combination will bring $600 million in annual cost savings, and so swiftly rebuffed the interlopers’ offer.
To be fair, the Nippon/Sherwin offer wasn’t stingy. Breakingviews calculations suggest the value of the Dutch group’s 55% stake in the merged Akzo-Axalta entity could be worth €12.3 billion after factoring in cost savings, implying that the €12.5 billion cash offered a slight premium to the Axalta merger. Yet getting AkzoNobel’s approval was always going to be hard. Not only was its board committed to the transatlantic tie-up, but its governance model includes a stichting, a foundation that has the power to resist hostile raiders by holding super-voting shares and veto-like rights. Nippon Paint and Sherwin-Williams would presumably have needed a far-superior offer, not just a small premium.
The complexity of their plan likely didn’t help. Though the Axalta merger comes with execution and regulatory risks, so would a two-way carve-up. Cash-hungry shareholders may not have minded, but a drawn-out breakup that dismantled AkzoNobel was unlikely to win over the board, or the stichting.
AkzoNobel famously resisted three bids from rival coatings group PPG in 2017, despite pressure from activist Elliott to engage with the suitor. This latest saga once again illustrates the power of Dutch governance rules to thwart takeovers. The 18% slide in AkzoNobel’s share price on Wednesday also shows they can have a tangible cost for shareholders.
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CONTEXT NEWS
Nippon Paint and Sherwin-Williams said on June 3 that they were abandoning their attempt to acquire rival paint maker AkzoNobel.
The Dutch group revealed last week that it had turned down a €73 per share cash offer from the duo, sending its stock 20% higher.
In a statement, AkzoNobel said that both its boards unanimously continued to recommend its planned merger with U.S. coatings group Axalta, which was announced in November 2025.
The group’s shares were down 19% to €54 as of 1045 BST.
(Editing by Neil Unmack; Production by Shrabani Chakraborty)
((For previous columns by the author, Reuters customers can click on JOHNSON/Jennifer.Johnson@thomsonreuters.com))
