SHARES in Courtaulds dropped 21.5p to 444p yesterday after the Dutch Akzo Nobel chemicals and fibres giant and the PPG paints group decided to split the chemicals company up between them rather than start a takeover war.
The Dutch company will proceed with its #1830m cash offer, or 450p per share, and on completion, PPG will buy two businesses for #175m. These are the packaging coatings and the paints operations in the US.
Akzo will merge the fibres businesses of both companies and hive off the new subsidiary.
The market action seemed to assume that there is now little chance of a counter-bidder, American investment house Donaldson Lufkin & Jenrette is now likely to depart from the scene.
It had approached PPG in the first instance with a deal whereby it would keep the fibres activities and the Pittsburgh-based company the coatings and paints.
Akzo bought 40.6 million Courtaulds shares at 448p yesterday to give it a 10% stake and as a deterrent.
The prospects of a counter-bidder entering the scene seem remote with the first closing date for acceptance being June 9.
On May 12, PPG said that it was in talks with Courtaulds which could lead to a higher offer than Akzo's bid.
Martin Evans of brokers Sutherlands said that the Akzo offer undervalues Courtaulds' businesses and still does not rule out a rival bid, even at this late stage.
The bid closes on July 10 with there likely to be only a minimal level of acceptances next Tuesday.
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