Akzo Nobel, the Dutch paint maker trying to fend off a 24.6 billion euro ($26 billion) takeover by U.S. rival PPG Industries, on Wednesday fleshed out its alternative plan to separate its chemicals business and pay shareholders 1.6 billion euros in extra dividends this year.
Setting out its strategy to investors in London, Akzo (akzoy) said it would sell or list the business, which accounts for about a third of sales and profits, within 12 months. Analysts have valued the division at roughly worth 8 billion euros, based on its 2016 operating profit of 629 million euros.
“This strategy will create substantial value for shareholders with significantly less risks and uncertainties compared to alternatives,” said Akzo Chief Executive Ton Buechner.
Buechner said that the company, whose brands include Dulux paint, may use proceeds of the spin-off to fund acquisitions, but the “vast majority” would be returned directly to shareholders.
Akzo has twice rejected takeover proposals from Pittsburgh-based PPG (ppg), despite strong encouragement from many of its shareholders to engage in merger talks.
Investors and analysts have largely been skeptical of whether Akzo’s alternative plan can rival PPG’s proposed offer of 90 euros per share in terms of value. Akzo shares gained 1% to 79.08 euros by 1050 GMT.
While PPG has said it sees merger synergies of at least $750 million, Akzo said on Wednesday it would cut costs by 200 million euros in 2017, of which 50 million would result from the separation of chemicals.
The company, which employs around 46,000 people, declined comment on possible job losses resulting from its plans.
Buechner set a new target for Akzo’s operating margin to improve to 15% by 2020 from 12% at present.
Buechner said the company’s paints and coatings divisions will each grow at 4% annually on the strength of its global brands such as Dulux, one percentage point better than the market.
At the chemicals division to be disposed, the company said it would increase operating profit, as measured by earnings before interest and taxes (EBIT), and before incidental costs, by 250 million euros by 2020 and another 200 million euros by 2022.
Earlier on Wednesday, Akzo reported better than expected first quarter earnings and forecast a 100 million euro increase in operating profit for the full year.
Akzo has argued that PPG’s bid does not adequately address concerns of other stakeholders, including employees.
Buechner said the company has not yet decided whether it will agree to a request by a significant number of shareholders to hold an extraordinary general meeting to debate and vote on the dismissal of Chairman Antony Burgmans.
Under Dutch law, shareholders representing 10% of a public company’s shareholder base have the right to summon such a meeting, though they may need to petition a judge if the company refuses.