PPG bid forces Akzo Nobel’s Ton Büchner to play defence

A single letter has upended Ton Büchner’s plans.

When the chief executive of Akzo Nobel, the Dutch paints and coatings company, sat down for a meeting with the head of PPG Industries in early March, he thought he was having a friendly chat with his US rival. Instead Michael McGarry, the polished Louisianan head of PPG, handed over a letter offering to buy Mr Büchner’s company.

The out-of-the blue approach marked the starting point of a transatlantic tug of war for Akzo Nobel. PPG Industries has launched two bids — worth €20.9bn and then €22.4bn — in three weeks. Akzo Nobel’s management has dismissed both.

Dutch politicians have lined up to fight any deal, but some shareholders are growing publicly mutinous and asking Akzo Nobel to engage.

Mr Büchner is caught in the middle. The engineer-turned-executive is now the man responsible for keeping a 225-year-old Dutch business out of the clutches of a US rival with a formidable record of dealmaking.

After choosing between playing the clarinet or studying engineering at university, Mr Büchner began an international career, based predominantly in Asia. He speaks Mandarin and has been labelled an “Asian with a Dutch passport” in the domestic press. He joined Sulzer Corporation, the SFr3.6bn Swiss industrial group, in 1994 and climbed the internal ladder, ending up chief executive in 2007.

The near career-long expat returned to the Netherlands to take the top job at Akzo Nobel in 2012. People who work with Mr Büchner describe him as full on. Sixteen hour days are common. “He is on every call, in every meeting,” says one.

This relentlessness came at a cost. Five months after taking over at Akzo Nobel, Mr Büchner took nearly three months off to recover from exhaustion. The share price plunged, but the group stuck by him. “CEOs are also human beings,” the company said.

Upon his return, he spent the next five years slowly nursing the Dutch company back to health. Akzo Nobel’s balance sheet was a mess following its acquisition of British company ICI in 2007, which brought with it a gaping pension deficit. Mr Büchner improved financial performance through an efficiency drive, according to investors and analysts.

Some criticised his caution. While the chemicals industry was consolidating, Akzo Nobel stood on the sidelines, focusing on its internal problems. Broadly, the strategy worked: the share price nearly doubled from its 2012 low.

But some shareholders were not happy. Akzo Nobel trades on a lower multiple than its rivals — and the €88.72 per share offer, which does not count a dividend that Akzo Nobel’s management says it will pay anyway, represents a 35 per cent premium to the undisturbed share price.

PPG’s bid represented the outside world intervening on Mr Büchner’s internal focus. While Mr Büchner oversaw nearly 20 deals at Sulzer, M&A has not been a major part of his strategy at Akzo Nobel.

In person, Mr Büchner comes across as well-polished, if slightly stiff; confident and firm but rarely deviating from script. This week he told the Financial Times: “I believe we are a good judge of the proposals we’ve had on the table [but] we do also listen carefully to shareholders.”

However, his strident rejection of PPG’s courtship has rankled many shareholders, especially his repeated allusions to a clash of cultures that have ended up casting this corporate brouhaha as a transatlantic feud between the Old World and New. “It’s not very open for a great trading nation,” said one shareholder.

With investors ratcheting up pressure, Mr Büchner faces a fight with a highly experienced opponent. Mr McGarry boasts of PPG pulling off 50 deals in the past decade. Whether Akzo Nobel becomes the 51st will come down to Mr Büchner.