American paint firm PPG has made a third attempt to buy Dulux parent Akzo Nobel, putting forward a revised cash-and-stocks offer worth €26.9 billion. 

The latest offer, of €96.75 per Akzo Nobel share, is 8% more than what the US company proposed two days earlier on March 22, and 17% more than its opening bid, which was made on March 2.

Pressure has been mounting on Akzo to enter negotiations, as its shareholders are reported to be unhappy that the Dutch firm is refusing to engage in talks with PPG. Shares in Akzo, which owns the Dulux, Hammerite and Cuprinol brands, jumped 6% to a record high of €82.95 following the improved proposal.

PPG said the new offer was Akzo Nobel's last chance to accept the deal. In a 14-page  letter to Akzo, PPG chairman and chief executive officer Michael McGarry said: “We are extending this one last invitation to you and the Akzo Nobel boards to reconsider your stance and to engage with us on creating extraordinary value and benefits for all of Akzo Nobel’s stakeholders.

“Our revised proposal represents a second increase in price along with significant and highly-specific commitments that we are confident Akzo Nobel’s stakeholders will find compelling. We stand ready to work with you expeditiously to complete a targeted due diligence review and to negotiate a definitive agreement for the combination.”

So far Akzo has attempted to fend off the bid and, last month, presented its case for remaining independent, with plans to float or sell its chemicals subsidiary, returning most of the proceeds to shareholders. The move would reportedly make Akzo a far less attractive prospect to PPG, although the US firm has estimated that “the long-term value creation from a combination of the two companies will be significant for shareholders of both companies”, with annual synergies of at least $750 million.

PPG added that its revised proposal offers “a value to Akzo Nobel’s shareholders that is well in excess of Akzo Nobel’s ability or track record to create value on a standalone basis”. Acknowledging Akzo’s plans to sell or spin off its chemicals business, PPG said it is “prepared to make significant commitments to Akzo Nobel’s stakeholders, as set forth in the revised proposal letter, that provide greater value and certainty than Akzo Nobel’s new standalone plan.”

It also criticised the strategy, adding: “As evidenced by the decline in Akzo Nobel’s stock price since its investor update, the capital markets have not recognized any additional value from its new standalone plan, including the enhanced regular dividend and special dividend that Akzo Nobel has proposed for 2017.

“One of the more notable risks of Akzo Nobel’s new standalone plan is that it creates two smaller, unproven standalone companies with uncertain market valuations and substantial risks for reaching its 2020 guidance, especially given many of the annual targets that Akzo Nobel has identified have not been achieved previously.

“Akzo Nobel’s standalone plan also will require substantial restructuring; potentially decreases free cash flow, putting future and accelerated growth plans of the demerged companies at risk; and could require a regulatory review that would extend the timeline and create uncertainty.”

Under the terms of the deal, PPG has said it is committed to maintaining Akzo Nobel’s strong ties to Europe, keeping the company’s decorative coatings headquarters in the Netherlands, while its marine and protective coatings business would continue to be based in both the UK and the Netherlands. It has also said it will not relocate any of Akzo’s production facilities in Europe to the US, adding that local suppliers in the Netherlands and UK would be given a full and fair opportunity to sell to the larger, combined new company.

It has also said it is prepared to have a dual listing of the combined company’s shares with trading both on the NYSE and Euronext Amsterdam and plans to retain Akzo’s major decorative brads, including Dulux and Sikkens.