AkzoNobel

AkzoNobel rejected a €13bn bid from Nippon Paint and Sherwin-Williams, despite the offer implying a 39% premium to its share price. Positive investor sentiment has driven the stock price ~20% higher at pixel time. The deal would have strengthened Nippon’s decorative paints position and expanded Sherwin’s coatings portfolio. Akzo cited undervaluation and reaffirmed its commitment to the Axalta merger. Likely support from Cevian for the refusal should avoid a repeat of 2017 when AkzoNobel repeatedly rejected a €26.9 billion (USD28.8bn) hostile takeover attempt by its US rival, PPG Industries, triggering a massive battle between shareholders and management. 

Expert Opinion:
Our change of rating (reduce vs Add) is purely mechanical and results from the limited upside following the strong increase in share price. On a standalone basis, we are now close to our share price. But there is now a speculative appeal that cannot be denied. Nippon Paint and Sherwin-Williams have stated they are "considering their next steps, if any but, based on what we read,  we suspect the consortium might have room to sweeten their proposal. If they want to disrupt the deal with Axalto, they will have to act fast and come back with a substantially higher valuation.

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