The Dutch paintmaker said it was in "constructive discussions" about a "merger of equals" of AkzoNobel Paints & Coating and Axalta, which would create a company with the market value of about $30 billion. AkzoNobel was responding to market speculation about the talks that sent Axalta's shares up 16.95% Friday to close at $33.15 in New York.
Akzo Nobel shares were down 1.64% in Amsterdam in the first half hour of trading, changing hands at €76.22. "We note that a deal does in fact make plenty of strategic sense," wrote analysts at Credit Suisse.
The company has been under pressure from activist investor Elliott management months after it rejected $30 billion takeover approach from PPG Industries PPG earlier this year. Under Dutch takeover law, PPG can make another bid from Dec. 1.
The Dutch company in mid-October issued its second profit warning in as many months after underlying earnings fell 13% to €383 million ($451 million) for the three months ending in September due "adverse foreign exchange, ongoing industry specific headwinds and supply chain disruptions". It also suffered from a temporary disruption to their manufacturing and supply chain, reporting a €25 million impact on earnings due to Hurricane Harvey and "other events". The group now expects Ebit for 2017 to be in line with 2016
"We have also initiated phase one of our transformation plan to create a fit for purpose Paints and Coatings organization which will deliver €110 million annual savings in 2018 contributing towards our 2020 financial guidance," CEO Thierry Vanlancker said in a statement.
The company will hold an extraordinary general meeting on Nov. 30 to vote on the separation of its Specialty Chemicals unit and said a €1 billion special cash dividend as advance proceeds will be paid on Dec. 7, following shareholder approval for the separation.
"AkzoNobel confirms that its separation of Specialty Chemicals, including the return of the vast majority of net proceeds to shareholders, remains on track for April 2018 and is unaffected by these discussions," the company said in its brief statement.
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