By Toby Sterling
AMSTERDAM (Reuters) - Dutch paint maker AkzoNobel (AS:AKZO) could face a shareholder revolt if it continues to avoid a meeting with PPG Industries (N:PPG) to discuss a possible takeover by the U.S. company, PPG Chief Executive Michael McGarry told Reuters on Wednesday.
McGarry said he had been approached by "virtually all" of Akzo's 20 largest shareholders after PPG proposed a 24.5 billion euro (£20.93 billion) takeover deal. None of them were opposed to the idea, he said.
"I think shareholders are dismayed at being placed last in all (Akzo's) stakeholder conversations," he said in an interview.
PPG said separately on Wednesday it was ready to address Akzo's non-financial objections to its proposal.
On Tuesday, Akzo repeated its opposition to a deal with the U.S. paints and coatings maker. It has said PPG's proposal undervalues its business, would run into difficulty with competition regulators and be bad for employees..
Many Akzo shareholders have urged the company's management to enter discussions. No major shareholder has come forward to oppose the idea.
In its statement on Wednesday, PPG said it was ready to address many of Akzo's concerns, including commitments to funding research and development, fair employment terms, equitable locations of divisional headquarters, and spending on community investment and sustainability targets.
"They're afraid if they sit down with us, we're going to address their concerns and they'll have no more legitimate" objections to the merger, McGarry said.
In a response, Akzo repeated PPG's proposals were "unacceptable."
"Let's not get caught up in other issues around the proposal such as engagement (with PPG)," the Dutch firm said.
"We remain firmly focused on developing our exciting plans for the future of AkzoNobel to unlock significant value for shareholders and all stakeholders, which we will present on April 19."
Akzo has said it prefers to sell its chemicals division, representing about a third of company sales and profits, and remain independent, rather than entering talks.
Analysts say Akzo's plan is unlikely to deliver as much value to shareholders as PPG's proposed cash and share offer, worth 90 euros per share at current prices.
"How are they going to look their own stakeholders and employees in the eyes and say 'we think this is best'?" McGarry said. "Someone is going to say: how would you know, because you've never sat down with PPG."
Akzo shares closed up around 1.5 percent at 79.10 euros, suggesting some investors doubt PPG will ultimately succeed.
Under Dutch stock exchange rules, PPG must submit a formal draft offer by June 1 or drop its pursuit for six months.
PPG repeated on Wednesday it intended to make an offer, and McGarry would not rule out a bid that lacks the endorsement of Akzo's boards. Few hostile takeovers of publicly traded Dutch companies have been successful.
McGarry said another option for shareholders if they were still dissatisfied with Akzo management after the April 19 strategy announcement would be to summon an extraordinary general meeting. Such a meeting could discuss the removal of one or more managers or supervisory board members.
However, a group of members of Akzo's supervisory board has the power to make binding recommendations to the company's management and supervisory boards, an unusual takeover defence that dates from 1926.
In theory that could prevent unwanted buyers from controlling the company even if they successfully take it over - though that defence has never been tested.