AkzoNobel has outlined a new strategy which will see its Specialty Chemicals unit separated into a new business unit and divested within 12 months.
In a 19 April statement, the Dutch chemicals company said the new strategy aimed to “accelerate growth and value creation” and will involve the creation of two “focused, high-performing businesses - Paints & Coatings and Specialty Chemicals.”
The restructuring which comes in the face of AkzoNobel’s takeover bid by US rival PPG Industries pledges to give €1bn special dividend to shareholders in November, “reflecting confidence in the planned separation,” the company added.
Under the new structure, the company will either list the Specialty Chemicals unit as a separate entity or sell it and focus on Paints & Coatings business with “fit-for-purpose” structure and processes”.
The unit, which had a €4.8bn revenue in 2016 makes ingredients for products including plastics, detergents and pharmaceuticals.
This new strategy, said AkzoNobel, will make €150m annual savings from continuous improvement programmes in Paints and Coatings, while the separation of the Specialty Chemicals will add an extra €50m cost savings.
Additionally, the company will be investing €1bn in R&D by 2020 to maintain focus on new product development.
The Dutch paint maker also pledged to use 100% renewable energy and be carbon neutral by 2050.
With the new layout, AkzoNobel expects to improve earnings (EBIT) in 2017 by around €100 million more than 2016.
"The industry-leading performance and outlook of our Specialty Chemicals business gives us the confidence to return proceeds to shareholders in advance of the separation. In addition, we see extensive growth momentum in our Paints and Coatings business, which we expect to keep growing faster than market rates, allowing us to improve our long-term financial guidance,” said Ton Büchner, CEO of AkzoNobel.
The strategy, he added, “will create substantial value for shareholders with significant less risks and uncertainties compared to alternatives.”
Also commenting on the new plan, Antony Burgmans, chairman of the AkzoNobel supervisory board, voiced his confidence in the strategy, saying it would deliver “superior shareholder value compared to the alternatives.”
"It will be delivered by a competent, experienced management team with a proven track record at a faster pace, with considerably less risk and at significantly lower social cost,” he concluded.