Akzo in £1.4bn buyback
Oct 9 2007 by Iain Laing, The Journal
DUTCH chemical group Akzo Nobel has unveiled a £1.4bn share buyback and raised its dividend payout ratio as it seeks shareholder approval for its £8.1bn purchase of ICI.
Akzo Nobel, which has 900 workers at its International Paint plant in Felling in Gateshead, is having an extraordinary meeting on November 5 on the proposed takeover of Imperial Chemical Industries, which once had more than 30,000 North-East staff but now employs only 150 at the Hammerite plant in Prudhoe, Northumberland.
Akzo chief executive Hans Wijers said: “Dividend is clearly a key factor for certain groups of shareholders. This is an element of listening to our shareholders and we are pretty optimistic that we will have a full shareholder support for the deal.”
Akzo Nobel, which had to raise its bid for ICI twice, faces opposition from at least one major investor, US fund TPG-Axon. “We are not trying to woo specific shareholders. We listen to groups of shareholders and potential shareholders... We will continue our constructive discussions with TPG and many other shareholders,” said Mr Wijers. He said the group aimed to boost its margins to above the industry average by outgrowing its markets and restructuring its underperforming decorative coatings.
Its margin on earnings before interest, tax, depreciation and amortisation (EBITDA) is around 12.7%, underperforming the industry average of 13.9% and major rivals such as DuPont at 19.8% and BASF at 18%.
Akzo said it will start a 2bn share buyback in the second half of next year and return 1bn in paid-in capital after the buyback.
Citigroup analysts said the 2008 dividend plan implies a payout of around 2 per share, versus its 1.5 forecast.
Akzo agreed in August to buy ICI, which makes Dulux paints, for £8bn to create the world’s biggest paint maker and retain its lead in industrial coatings.
