The world’s leading paint-maker AkzoNobel NV, fending off a hostile takeover bid from US rival PPG Industries Inc, yesterday unveiled plans to shed its chemicals division as first-quarter profits came in stronger than expected.
The Amsterdam-based group reported net profit of 240 million euros (US$257.4 million) in the January-to-March period, relatively stable from the same period last year, but ahead of analysts’ expectations.
Sales of such household brand names as Dulux and Trimetal were up 7 percent to 3.7 billion euros, the company said in a statement, as it announced plans to spin off its specialty chemicals division within 12 months.
AkzoNobel’s paint-making business is seen as a barometer of underlying global economic activity.
However, the company and chief executive officer Tom Buchner have been under pressure amid an increasingly hostile bid by the Pittsburg-based paints and coatings business PPG.
Yesterday, just after posting its first-quarter results, AkzoNobel unveiled a “new strategy to accelerate growth and value creation.”
It will separate from its specialist chemicals division, which last year reported sales of 4.8 billion euros, either via a sale or by listing it as a separate entity.
Most of the profits from the move are to be returned to shareholders, said Buchner, who has been under pressure to step down.
About 1.6 billion euros is also to be paid out to shareholders this year, which includes a special 1 billion euro dividend to be paid in November.
“Our commitment to substantial shareholder returns reinforces our belief that the plan we are outlining today will create a step change in value creation, generating significant shareholder value in the short, medium and long term,” Buchner said in a statement.
The plan “will be delivered at pace, with a clear time line and is in the best interest of all stake,” he added.
Last month, AkzoNobel flatly refused two bids from PPG saying they did not reflect the company’s potential long-term value and would “lead to uncertainty for the thousands of employees around the world.”
PPG on Monday sent an open letter to shareholders seeking to win them over, saying it had “a long and steadfast history of taking consistent strategic actions to grow our business.”
It said that it invested “more annually in research and development than any other paint and coatings company.”
A merger between the two companies would prove “a unique and attractive opportunity for the future,” it said.
Formed in 1994 in a merger between Akzo and Nobel, the Amsterdam group employs 46,000 people in 80 countries.
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