AKZO NOBEL N.V. 
AMSTERDAM (Reuters) - Akzo Nobel (>> Akzo Nobel), the Dutch paint maker that rejected a 26.3 billion-euro ($29.6 billion) takeover proposal from U.S. rival PPG Industries (>> PPG Industries, Inc.), has sent PPG a letter shortly after its suitor walked away, detailing its objections to doing a deal.
In the letter to PPG Chief Executive Michael McGarry and dated June 1, the day when PPG formally dropped its pursuit of Akzo, the Dutch company said a break fee of 600 million euros proposed by PPG in case a deal foundered was too little.
The letter, seen by Reuters, also said that giving a period of 15-18 months to overcome regulatory hurdles would have "caused damage to our business and all our stakeholders."
Many of Akzo Nobel's shareholders were unhappy with the company's outright rejection of the offer, which valued Akzo's shares at above 95 euros a share. Its share price was down 1.3 percent at 75.99 euros on Friday.
Akzo had previously said that the PPG deal was not in the interest of "all stakeholders", including employees, customers, the environment and the broader Dutch economy.
In the letter it said PPG had forecast 35 percent of the 750 million euros in synergies it expected from the deal would come from "people", implying significant job cuts.
It also noted that PPG estimated that divestments of up to 10 percent of the combined companies' paints and coatings operations could be needed to achieve regulatory approval, accounting for 2.3 billion euros of annual sales.
Akzo said those divestments would be "value eroding" and were still less than what Akzo thought would be needed to win approval.
PPG spokesman Bryan Iambs said in an email on Friday that the company had made several offers in its proposals that would have added value to a deal and created "more certainty and great upside."
"For example, we understand that 200 million euros was one of the highest break-fees offered in the Netherlands for a public company deal, and we were offering 3x at 600 million euros," he said.
Having formally withdrawn its proposed offer, PPG is not allowed under Dutch rules to approach Akzo again for six months.
A group of disgruntled shareholders led by Elliott Advisors and representing 18 percent of Akzo's shareholder base have not yet said what they intend to do after an Amsterdam commercial court rejected an application made by Elliott asking for an extraordinary meeting of shareholders to discuss a proposed dismissal of Akzo Chairman Antony Burgmans.
The court ruled that was an effective attempt to force Akzo to enter talks with PPG.
Elliott, which still has the option of pursuing a mismanagement suit against Akzo's management for the handling of the PPG bidding process, has declined to comment on the affair.
On Friday Akzo Nobel issued a statement saying it hoped to repair damaged relationships with its shareholders, as the court, the Amsterdam Enterprise Chamber, instructed it to do in its ruling on Monday.
""We highly value shareholder perspectives and regret that a number of shareholders believe we have insufficiently explained our considerations in respect of PPG's proposals," Akzo Chief Executive Ton Buechner said in a statement.
(Editing by Greg Mahlich)
By Toby Sterling
