The vast majority of Akzo Nobel NV’s top shareholders want the Dutch chemical maker to hold takeover talks with PPG Industries Inc., the U.S. company’s chief executive officer said.

Meetings with “virtually all” of Akzo’s biggest 20 shareholders across the U.S. and Europe found that 97 percent support “getting the two sides together,” PPG’s Michael McGarry said by phone Wednesday. “Both PPG shareholders and, more importantly, the Akzo shareholders want us to move forward,” he said. The discussions “have found no one skeptical.”

McGarry’s comments echoed those of Elliott Management Corp., the hedge fund founded by billionaire Paul Singer, which said last month that deal talks are supported by 94.1 percent of Akzo shareholders.

PPG said it intends to make a formal bid for Akzo even after Europe’s largest coatings company refused to enter talks and rejected two offers. The U.S. company’s most recent bid was valued at about $24 billion.

“Today tells us that the story isn’t over, and that they will put their cards on the table in the next two months,’’ said ABN Amro analyst Mutlu Gundogan. “Either PPG will stay friendly and raise its bid,” he said, or PPG will make its offer unconditional, “which means they would go hostile.”

A draft proposal is expected to be submitted to Dutch regulator AFM by June 1, the Pittsburgh-based company said in a statement. The world’s biggest paintmaker again urged No. 2 Akzo to start negotiations, arguing that a combination would create a stronger business.

Hostile Option

McGarry reiterated Wednesday that making a hostile bid for the Amsterdam-based company remains an option. He also said investors may call for an extraordinary general meeting after Akzo holds its annual gathering on April 25. Elliott, Akzo’s fourth-largest shareholder, last month said it would consider calling a meeting at which directors and management could be removed.

Akzo CEO Ton Buechner has faced growing pressure from investors to negotiate after the company rejected PPG’s offers as too low and said they would lead to job losses. Akzo on Wednesday again called the proposals “unacceptable.” A spokeswoman said the company is conducting daily conversations with shareholders.

Buechner has said his plan to sell Akzo’s chemical business to focus on coatings and paint would create more value and carry fewer risks than a PPG takeover. Also, gaining antitrust approval from the European Union for a PPG takeover would be drawn out and complicated by political opposition in the Netherlands, according to Akzo Chairman Antony Burgmans.

Asset Sales

McGarry said Akzo’s plan to separate chemicals would be a tougher way to create value and harder on employees than combining with PPG. The U.S. company has been contacted by several potential buyers of assets that antitrust regulators may want divested before approving an Akzo deal, he said. He declined to identify the assets.

Keeping Akzo’s chemical business after completing a takeover would depend on whether it is “consistent with where we are heading,” McGarry said. PPG for several years has been shedding commodity chemical assets, such as chlorine, to sharpen its focus on coatings, which now account for 97 percent of sales.

“Do they support our mission of being the No. 1 coatings company in the world and can they play a part in that role?” McGarry said.

There are few cultural differences that would prevent a successful combination of the companies, he said, citing PPG’s integration of the U.S. paint business it purchased from Akzo in 2013.

Akzo Nobel shares climbed 1.5 percent to close at 79.10 euros in Amsterdam. PPG’s second bid was valued at about 88.72 euros a share. PPG rose 1 percent to $105.78 at 12:21 p.m. in New York.

Under Dutch law, PPG had until the end of Thursday to indicate whether it would submit an offer document or walk away for six months.

Source: Bloomberg