Akzo Nobel confirms intent to acquire Tikkurila with binding proposal
After its initial non binding proposal Akzo Nobel now has submitted a binding proposal to the Board of Directors of Tikkurila to acquire the Finnish coating manufacturer having completed its due diligence on the company. The offer still represents a total value of around €1.4 billion and is a counter offer to PPGs intend to acquire Tikkurila.
AkzoNobel announced it had made a comprehensive non-binding proposal to acquire Tikkurila and invited the Board of Directors of Tikkurila to enter into negotiations with a view to reaching agreement on a recommended voluntary public cash tender offer.
After conducting customary due diligence Akzo Nobel has renewed its view that clear synergies would be created from collective procurement capabilities, expanded production, and combined sales and distribution channels. The Duth company argues that the combination would deliver substantial value creation for shareholders and also create significant opportunities for future growth – both for the company and its employees – by providing customers with more innovative and sustainable solutions. The proposed transaction is consistent with the capital allocation priorities of Akzo Nobel, is expected to be EPS accretive in the first year and value creating in the medium-term. The proposal is not conditional on financing – it would be financed using existing cash and credit lines.
Key terms for launch and completion of an offer
The making of the potential tender offer, if any, depends on the satisfaction of the below pre-conditions. If the process advances quickly, an offer could be announced in February and Akzo Nobel would envisage the offer period to begin as soon as possible in March. The transaction would be expected to be completed during 2021.
The binding proposal is conditional on Akzo Nobel and Tikkurila entering into a combination agreement pursuant to which the Board of Directors of Tikkurila recommends to their shareholders to accept Akzo Nobel’s offer and obtaining an irrevocable undertaking from Oras Invest Oy to accept the tender offer. According to the proposal, the completion of the tender offer, if announced, would be subject to customary conditions, such as reaching a 90% acceptance level, obtaining required regulatory approvals, no legislation or decision by a court or authority preventing the transaction, no material adverse change regarding Tikkurila, and the combination agreement, Tikkurila Board’s recommendation and the irrevocable undertaking to be obtained from Oras Invest Oy remaining in force. AkzoNobel would reserve the right, at its sole discretion, to waive any of the conditions for completion of the potential offer.
Akzo Nobel reacted with its offer to the announcement of US based competitor PPG to acquire Tikkurila. PPG announced a number of large acquisitions in the past weeks in the United States and Europe.
