Akzo agrees to sell Courtaulds units
Thursday 04 June 1998
PPG, based in Pittsburgh, Pennsylvania, will pay Akzo $285m (pounds 174m) for the businesses it most wanted - Courtaulds' US production of paints for buildings and beverage cans. PPG, which said last month it might bid for all of Courtaulds, now will bid only if Akzo's offer fails.
The agreement clears the way for Akzo's $3.68bn takeover of Courtaulds, the world's biggest marine and aerospace coatings maker, in a move that would catapult the Arnhem-based chemical maker to world leadership in paints manufacturing. Akzo made its agreed cash and assumed-debt offer on 20 April.
"It's great news for Akzo in that it lifts its critical mass further in coatings, making them number one in their chosen areas,'' said Philip Morrish, analyst with Nikko Europe.
Akzo has said it plans to bundle another major Courtaulds division, fibres, into its own and sell or spin it off the combination by 2000. A successful Akzo bid for Courtaulds "lifts their critical mass in fibres so they can have a fairly clear exit from the business,'' Mr Morrish said.
Akzo shares rose as much as 14.5 guilders, or 3 per cent, to 444 guilders. Courtaulds shares, which have traded above Akzo's 450p-a-share offer for several weeks based on the likelihood that PPG may make a counter-bid, fell 21.5p to 444p, with 47 million shares traded by mid-afternoon in London.
Together, Akzo Nobel and Courtaulds would have coatings and annual paints sales of about $5.67bn, combining Courtaulds' brands such as Micron Optima yacht paint and Interspray 900 gloss coatings with Akzo Nobel's decorative paint brands such as Astral and Crown.
Analysts estimate a deal would give Akzo control of nearly 15 per cent of the $40bn worldwide paint and coatings market.
Under the April agreement, Akzo Nobel will pay pounds 1.83bn in cash for Courtaulds and assume pounds 430m of debt.
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