Akzo Nobel unveils plan to separate chemicals arm, pay special dividend

PPG Industries chief executive pens open letter to AkzoNobel stakeholders:

The Dutch firm, which took over British giant ICI in 2008, revealed it would separate its chemicals business from its United Kingdom paints arm, increase its financial guidance for the year and dish out £1.3 billion of dividends.

Recent developments in the back and forth between the two companies have taken a more hostile tone, with PPG CEO Michael McGarry this week appealing directly to Akzo Nobel shareholders with his rationale for the deal.

But AkzoNobel said the board still "strongly supports" Burgmans, adding his removal "would be irresponsible, disproportionate, damaging and not in the best interest of the company, its shareholders and other stakeholders".

PPG said its proposal featured an "immediate cash payout far in excess of AkzoNobel's special dividend".

Analysts have valued the chemicals division at roughly worth 8 billion euros, based on its 2016 operating profit of 629 million euros.

Akzo Nobel NV has outlined a new strategy which will see its Specialty Chemicals unit separated into a new business unit and divested within 12 months. The plan would "generate superior, faster and more certain value creation than the alternatives and with substantially fewer risks, uncertainties and social costs", it said.

PPG Industries (PPG) dismissed Dutch takeover target Akzo Nobel's (AKZOY) proposal to offer shareholders an alternative to its US counterpart's takeover bid Wednesday.

The share price of the company (AKZOY) was down -1.36%, with a high of 28.13 during the day and the volume of Akzo Nobel shares traded was 424948.

Elliott, which has a 3.25 percent stake in Akzo and has been critical of the company management, kept up the pressure.

Maelys Castella, AkzoNobel's chief financial officer, said the company was committed to increasing returns to shareholders and had launched a 150 million euro (£125 million) share repurchase plan during the first quarter.

The Dutch company will run a dual-track process to consider separating out the specialty chemicals business through a listed entity or a sale, the company said Wednesday.

The Dutch company, which employs around 46,000 people, declined comment on possible job losses resulting from its plans.

Buechner set a new target for Akzo's operating margin to improve to 15% by 2020 from 12% at present.

The Amsterdam-based group also reported net profit of 240 million euros ($257 million) in the period from January to March, relatively stable from a year earlier, but ahead of analysts' expectations.

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