Fighting an increasingly uphill battle against engaging with PPG, which is in hot pursuit of the Dutch company, AkzoNobel CEO Ton Büchner is poised to try to convince an Apr. 19 shareholders meeting that a takeover by the US rival coatings manufacturer is not the best way forward.

Since his revelation in early March that PPG had made a €20.9 bn bid to acquire Amsterdam-based AkzoNobel and especially following the US company’s higher bid worth €22.4 billion later in the month, Büchner has remained undeterred by calls to enter talks. However, powerful shareholder groupings now said to represent 17% of the company’s stock are pressuring the CEO for a change of strategy.

Foremost among proponents of engaging with PPG is hedge fund Elliott Advisors, which immediately following the second bid, despite acknowledging that it considered the size of the offer inadequate, urged talks between the two sides.  Several other shareholder groupings believed to include Columbia Threadneedle, Causeway Capital, Franklin Templeton, Henderson, Harris Associates and Southeastern Concentrated Value have now signaled dissatisfaction with  Büchner’s perceived rigid stance.

Elliott meanwhile has taken its opposition a step farther, calling for an emergency general meeting, at which it intends to propose dismissing Akzo’s chairman, Antony Burgmans. The coatings company’s supervisory board has defended its chairman, however, saying in a statement that it “strongly supports” Burgmans, whose “unique experience of international business and global transactions” it sees as crucial.

The board chairman’s position that the Dutch state – which opposes a combination with PPG on political grounds – is a particular thorn in the US hedge fund’s side. Economics minister, Henk Kamp, has openly supported Büchner’s in saying that a deal with the US firm would be “detrimental to the societies and economies in which AkzoNobel operates,” including potentially jeopardizing the company’s major contribution to communities and research & development organizations globally and its”deep commitment to sustainability.”

Akzo has reported Elliott to regulators, saying it has learned the hedge fund intended to "privately share potentially price sensitive information with PPG" about its decision to request an egm, while calling on Elliott to “clarify” its relationship with the US coatings producer. In response, Elliott said PPG “has met and communicated with Akzo Nobel’s top 20 shareholders,” including itself, adding that “a substantial portion” also supports an egm.

The Amsterdam company said its board will consider the egm proposal and, in accordance with Dutch company law, respond within the statutory 14 days. As an alternative strategy to merging with PPG to create a dominant player in the $130 billion global paints and coatings market, Büchner has proposed a spin-off off Akzo’s specialty chemicals arm, which had €4.8 billion sales last year, as the best solution to unlock value. The business is claimed to enjoy leading positions across a range of market segments

PPG’s CEO, Michael McGarry, meanwhile has written to Akzo shareholders, asking them to support merger talks. The US company will hold its own annual general meeting in Pittsburgh on Apr. 20, at which the proposed merger with the Dutch coatings manufacturer will be a topic.