By Ben Dummett 

Akzo Nobel N.V.'s largest shareholder on Thursday became the latest investor to urge the Dutch paint and chemicals maker to start negotiations with U.S. rival PPG Industries Inc. over its $24 billion takeover offer.

On Wednesday, Amsterdam-based Akzo rejected a second, sweetened takeover offer by PPG. But in a letter to Akzo's board, Causeway Capital Management LLC. said that while PPG's current offer was "inadequate," it was high enough for Akzo's management to start negotiations.

"As long-term shareholders, we believe combining Akzo Nobel and PPG would create a stronger company, and lead to improved prospects for both shareholders and employees," Causeway Chief Executive Sarah Ketterer wrote in the letter. The letter was distributed to reporters Thursday.

An Akzo spokesman said the company has no plans to start talks with PPG. "While we understand that certain shareholders may have a different position, [Akzo CEO Ton Buchner] is acting on the recommendation of the board of management and the supervisory board, which take into account all of the stakeholders," said Andrew Wood. A PPG spokesman couldn't immediately be reached.

Akzo's board and management remain opposed to a takeover by PPG, and investors still see the deal as unlikely. PPG's second approach came just weeks after Akzo rejected PPG's initial EUR83-a-share offer. In both cases, Akzo said the offers undervalues the company and doesn't warrant further talks.

Shares in the Amsterdam-based company were up a bit more than 2% midafternoon Thursday at EUR77.59, trading at steep discount to the latest offer price of EUR88.72 a share.

Causeway's move adds to calls by other investors, including U.S. activist investor Elliott Management Corp., to engage in talks. On Wednesday, Elliot threatened to use corporate rules unique to the Dutch company's structure to call a special shareholders meeting, in a bid to force Akzo's board to talk with PPG.

To achieve that goal, Elliott, which owns a 3% stake in Akzo, says it would need 10% shareholder support. Causeway's support helps it get there.

Causeway is Akzo's largest shareholder with a stake of around 6.8%, according to FactSet. It oversees about $44.3 billion in assets and invests in equities globally.

Write to Ben Dummett at ben.dummett@wsj.com

 

(END) Dow Jones Newswires

March 23, 2017 14:05 ET (18:05 GMT)

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