Dulux owner AkzoNobel has rejected a £10.9bn takeover offer from rivals Nippon Paint and Sherwin-Williams, arguing the bid undervalued the business.
The Dutch paint and coatings giant, which owns Dulux, said the non-binding cash proposal lacked deal certainty and would have split the company between the two suitors.
The offer was worth €73 per share, representing a 39 per cent premium to AkzoNobel’s last closing price of €52.52.
Shares in the business jumped 20 per cent following the news, reaching €63 by 12.41pm GMT and putting the company on course for its best trading day since at least October 2008.
AkzoNobel said its board continued to recommend its planned merger with US coatings maker Axalta.
The proposed deal, which shareholders are due to vote on in early July, would create a combined coatings business with an enterprise value of $25bn. It would be led by AkzoNobel chief executive Greg Poux-Guillaume.
The merger is expected to complete in late 2026 or early 2027, with the two companies previously saying the combined business could deliver $600m in annual cost savings, most of them within the first three years.
Under the rejected proposal, Nippon Paint would have acquired AkzoNobel and kept its decorative paints and industrial coatings businesses, while selling its automotive, marine and powder coatings divisions to Sherwin-Williams.
Nippon Paint and Sherwin-Williams said they were considering their next steps following AkzoNobel’s decision. The companies said they believed their proposal offered “significant strategic benefits” to AkzoNobel’s businesses.
The pair added that the offer did not include any financing conditions and was not subject to shareholder approval from either Sherwin-Williams or Nippon Paint.
However, an AkzoNobel spokesperson said neither proposal qualified as a “potentially superior” offer compared with the Axalta merger.
Brokerage MKI said AkzoNobel’s comments appeared to suggest the proposal was rejected on price, while noting the consortium may have timed its approach for when the company’s share price was low.
“The hint here is probably that the consortium has more up its sleeve,” MKI analysts wrote.
AkzoNobel previously rejected a takeover offer from Pittsburgh-based PPG Industries in 2017.
A hostile bid could be complicated by AkzoNobel’s stichting, a Dutch legal structure used as an anti-takeover mechanism, which holds 48 priority shares worth 400 votes each.
MKI said the stichting remained firmly committed to the Axalta merger, meaning that if shareholders were to terminate the deal, it could still block a takeover bid and leave the company without an agreement.
The analysts said Nippon Paint and Sherwin-Williams would likely need to offer a much higher price and significant commitments to persuade AkzoNobel’s board to walk away from the existing merger plan.
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