Chemicals

PPG might as well go hostile on Akzo

11 May 2017

It has little to lose by taking its $27 bln bid for the Dutch paint maker straight to shareholders. If Akzo invokes its poison pill, the deal falls away anyway. And if the U.S. suitor wins shareholder support, Akzo’s board will face enormous pressure to make the tie-up friendly.  

Shareholder battle weakens Akzo’s standalone case

9 May 2017

Activist investor Elliott is taking the Dutch paint maker to court in an attempt to oust chairman Antony Burgmans. Akzo’s defence against suitor PPG rests on its stock trading on a higher multiple after a corporate rejig. But bad governance could cancel out any upside.

Revived chemical megadeal fits China’s new formula

9 May 2017

Now ChemChina's $43 billion takeover of Syngenta is concluding, a merger with rival Sinochem is back on, according to a media report. Beijing wants fewer and bigger centrally run state-owned enterprises. Scale and financial strength matter more than Western-style cost cutting.

Akzo board has painted itself into a corner

8 May 2017

The Dutch paint maker’s categorical rejection of rival PPG’s 24.6 bln euro bid creates two glaring problems for boss Ton Buechner. His self-imposed targets are fanciful, and many shareholders doubt his judgement on the deal. Should PPG go hostile, two battles will become three.

Bayer exemplifies Germany’s too-powerful boards

28 Apr 2017

A big institution is unhappy the chemicals group didn’t give it a say on its value-burning $66 bln purchase of Monsanto. German companies can do deals without putting them to a vote and often have carte blanche to raise capital. The wound is self-inflicted and possibly avoidable.

PPG raised offer kicks hole in Akzo’s door

24 Apr 2017

With a 50 pct premium, guarantees for European workers and a big break fee, the U.S. paint maker’s third approach for its Dutch rival leaves CEO Ton Buechner no choice but to engage. The onus would then be on PPG to explain how this rich 24.6 bln euro deal makes financial sense.

Cox: Ugly global paint battle drips with irony

20 Apr 2017

PPG's $24 bln hostile bid for Akzo Nobel has devolved into a colorful war of words and investor presentations. Both sides are hypocritically seeing red over defensive tactics and strategic steps each has used itself. Strip it down, though, and the only hue that matters is green.

Akzo’s go-it-alone plan has a rose-tinted hue

19 Apr 2017

The besieged maker of Dulux paint is wooing investors by breaking itself up and becoming more profitable. On paper, the strategy is superior to merging with U.S. rival PPG. In reality, lifting margins by a quarter until 2020, while cutting fewer jobs, looks a stretch.

Risk-taking Reliance shows Indian market shift

12 Apr 2017

Mukesh Ambani's $70 bln giant may soon reclaim its position as India's most valuable company. The rebound upends assumptions that local investors prefer pure "new economy" firms like TCS. Ambani's hybrid is reaping the rewards of massive spending on both oil and telecoms.

EU takes trustbusting into future with Dow remedy

29 Mar 2017

European regulators will let DuPont and Dow merge, but first they must divest DuPont’s labs. The goal is to ensure future pesticides make it to market. It’s a logical consequence of technology’s importance, but Brussels struggles to preserve competition today, much less tomorrow.

Akzo activists are useful and best ignored

29 Mar 2017

Holders of a quarter of the Dutch paint maker’s shares think it should engage with hostile bidder PPG, claims activist fund Elliott. Yet by rushing into talks, Akzo would play a trump card too early. Appearing lukewarm, but with shareholders still keen, may lure a better offer.

Air Products finds China M&A has unstable element

27 Mar 2017

The U.S. firm is giving up on a $1.5 bln play for Yingde Gases. A profit warning from the target provides cover for a retreat but Air Products underestimated a messy boardroom spat, and its months-long trauma highlights the difficulties faced by foreign suitors in China.

PPG bid for Akzo fails narrative and maths tests

24 Mar 2017

The U.S. paint and coatings maker says cost savings and the benefits of scale justify a $24 bln offer for its Dutch rival. It’s hard to tell a more visionary tale in a low-growth sector where consolidation is the way to stay ahead. But PPG’s synergy targets don’t add up either.

Paint by numbers

22 Mar 2017

PPG's sweetened $24 bln takeover bid for Dutch coatings rival Akzo Nobel has been rejected. How much more could PPG pay and what kind of cost savings would it have to find to justify the deal? Use the Breakingviews calculator to run the math.

Akzo shareholders, beware the double-Dutch defence

22 Mar 2017

The maker of Dulux paint says a sweetened $24 bln approach by U.S. rival PPG is bad not just for shareholders but the community, customers and employees. It’s hard for a suitor to counter those claims. If such defences become the norm, expect fewer takeovers and lower valuations.

Akzo’s coating against $22 bln bid looks thin

9 Mar 2017

The Dutch maker of Dulux paint has rejected a cash and shares offer by U.S. rival PPG, and may detach its specialty chemicals unit instead. It’s good that Akzo Nobel has presented a swift alternative plan. It’s just unlikely to be as valuable as the one the company just rebuffed.

Syngenta forces hedgies to read Chinese tea leaves

26 Jan 2017

Investors have swung from despair to optimism over the agribusiness giant's $43 bln sale. The implied probability of ChemChina's bid for Syngenta succeeding has leapt from 10 pct to over 60 pct in a few short weeks. Beijing's involvement means extra complexity for arbitrageurs.

Plenum adds to jitters over Chinese outbound M&A

25 Oct 2016

A leadership conclave this week is a prelude to a reshuffle of the party's top cadre. That's a distraction for the officials whose jobs hang in the balance at state firms like ChemChina. And it's one more reason to worry about the completion of Chinese outbound deals.

Syngenta investors can depend on Chinese stomachs

20 Oct 2016

Talk of a state-ordered merger rattled shareholders of the Swiss agribusiness group, which has accepted a $43 bln takeover by ChemChina. But food security is crucial for Beijing and there are few comparable targets available. A failed deal would be a big embarrassment too.

Size-is-all Chinese M&A hits a chemical high

14 Oct 2016

Sinochem and ChemChina are in talks to create a group with nearly $100 billion in sales. Like other tie-ups between big state-owned enterprises, scale comes before economic rationality. Attempting to do this while ChemChina is also buying Syngenta is sheer folly.