PPG has decided to walk away from AkzoNobel after a bitterly fought three-month struggle to acquire its Dutch rival. The US paints and coatings group had offered €26.9 billion in April, improving on two previous bids, but AkzoNobel remained resolute in its rejection, which led to the possibility of PPG launching a hostile takeover.

Last week, a Dutch court rejected PPG’s plea for extra time to submit a tender offer and national takeover rules mean that the company cannot return with any further bids for six-months.

In a statement released on Jun. 2, PPG confirmed it had withdrawn its proposal to combine with AkzoNobel and would not pursue a public offer. Michael McGarry, chairman and CEO of PPG, stated: “AkzoNobel’s boards have consistently refused to engage.  As a result, we believe it is in the best interests of PPG and its shareholders to withdraw our proposal to AkzoNobel at this time.”

AkzoNobel may have been victorious but it has not emerged from the fight unscathed and must now work to repair relationships with certain of its shareholders, some of which had supported a deal with PPG. Hedge fund Elliott Investors resorted to legal action to oust AkzoNobel chairman, Antony Burgmans, and force the company to engage in talks but a Dutch commercial court rejected the bid. The Amsterdam-based group has said it will embark on a program to actively solicit shareholders’ views, including those who have recently challenged the company.

“We highly value shareholder perspectives and regret that a number of shareholders believe we have insufficiently explained our considerations in respect of PPG's proposals,” said AkzoNobel’s CEO, Ton Buchner. “We understand our responsibility and accountability to shareholders and will do our best to provide further insight in order to increase understanding concerning our strategic decisions. We will be seeking and listening to feedback with an aim to improving these important relationships.”

Buchner believes his own plan to separate its specialty chemicals business will provide better returns for shareholders than a merger with PPG.  He said the company will continue to focus on pursuing its strategy of accelerating sustainable growth and profitability and creating two focused, high performing businesses.

Analysts speaking to British business newspaper Financial Times believe that PPG’s failure to ink a deal with AkzoNobel could leave it open to threats from competitors such as Axalta, DuPont’s spin-off, which are encroaching on its mainstay business of automotive coatings. “The coatings market remains relatively fragmented, so I do believe medium-to-long term there will be more consolidation,” Hassan Ahmed of equity research firm Alembic Global Advisors, told FT, adding that in the near-term, PPG may just deploy more capital towards share buybacks and dividend boosts rather than immediately pursuing another deal.