By Toby Sterling
AMSTERDAM (Reuters) - The chief executive of U.S. paint maker PPG (N:PPG) won the backing of Akzo Nobel's (AS:AKZO) largest shareholder on Thursday after flying to Amsterdam to press the Dutch company to open talks on a 22.7 billion euro (20 billion pound) takeover.
PPG Chief Executive Michael McGarry said he hoped to meet "stakeholders" including local media, shareholders, politicians, employee groups and Akzo's boards after having an improved offer rejected this week.
"I offered to come over here any time, any day, any place," he told reporters at a PPG factory on Amsterdam's industrial outskirts.
Pressure from investors to at least give PPG a hearing is growing on Akzo and its Chief Executive Ton Buechner.
Akzo's largest shareholder, Causeway Capital, which holds a 6.8 percent stake, said in a letter to the company's boards on Thursday that while "the current bid ...is inadequate, we believe the bid is at a level where management should now engage in discussions with PPG."
McGarry said he was not considering another improved offer or a hostile bid for the time being, believing Akzo's investors will force the company's boards to change their mind.
Akzo CEO Buechner told Reuters on Wednesday that he was not willing to meet McGarry on the basis of PPG's latest offer.
"The present proposal does not warrant Akzo Nobel's engagement with PPG," Buechner said, citing differing corporate cultures and "execution risks."
A poll of 50 Akzo Nobel shareholders published by Sanford Bernstein found that 80 percent of them wanted the company's management to enter talks with Pittsburgh-based PPG.
Dutch shareholder advocacy group VEB, as well as several major investors have publicly called for Akzo to enter talks.
SWIFT ANSWER
McGarry said Akzo, whose brands include Dulux paint, had been too hasty in its response to the latest offer.
"It was shocking that (our) enhanced proposal was turned down in basically a day," McGarry said, arguing that the offer addressed all major concerns raised by Buechner after PPG's first approach in early March.
"I think that's what probably upset shareholders the most."
He also questioned whether Akzo would ever achieve a 90 euro share price -- the estimated per share value of PPG's second offer in cash and shares -- under Akzo's own plan to spin off its chemicals division instead of negotiating with PPG.
Akzo shares traded 2.5 percent higher at 77.63 euros by 1600 GMT.
Dutch politicians have expressed concerns over the impact of a deal on jobs and the company has defences to help ward off its suitor. Akzo employs 46,000 people around the world, while PPG has a similar number of staff.
Michael Wegener, managing partner at Hong Kong-based hedge fund Case Equity Partners, said he had staked 6 percent of his fund's net assets on a position in Akzo on conviction a merger will happen.
PPG's second offer was "a reasonable premium as a credible basis for engagement" he said, arguing that shareholders would begin agitating for a change of management.
"My feeling is two-thirds possibility this will get done friendly, and one-third hostile, but in the end, the overall high-probability outcome (is) the deal will come."
