Akzo Nobel has announced places to merge with Axalta Coating Systems Ltd. (NYSE: AXTA) to create a $30 billion company after rejecting a recent takeover offer as well as two profit warnings. Following this announcement, Axalta’s shares jumped 17% with a total worth of $8.1 billion while Azko shares reported 0.7% lower.
“This seems a classic attack-is-the-best-defense strategy,” said a fund manager at one of Akzo’s top-10 investors who asked not to be named. “Akzo overpromised after defending their own company and started to fail to deliver in Q3, so (they) need to do something transformational,” he added.
This deal predicts savings of around 250 million euros as Akzo pays mostly with shares and would sell the Specialty Chemicals division which represents a third of its profits and sales. 1 billion extra euros would also be returned to investors this year through a special dividend in advance of this sale.
Analyst Joost van Beek of Theodoor Gilissen said, "there is a large risk that Akzo will pay too much, as it is clear that they want to stay out of the hands of PPG, and Axalta knows that."