PPG Announces Decision to Withdraw Proposal and Not Pursue Offer for AkzoNobel

PITTSBURGH–(BUSINESS WIRE)–$PPG #Akzo–PPG (NYSE:PPG) today announced that it has withdrawn its proposal to
combine with AkzoNobel (AKZA.AS:AKZOY) and will not pursue a public
offer for all the issued and outstanding shares of AkzoNobel. PPG made
the final decision today after careful consideration, including the
stakeholder interests of both companies.

“We were hopeful throughout this process that AkzoNobel’s Boards would
see the merits of our compelling proposal to combine our two great
companies and create significant shareholder value and a more
sustainable business for the future. We strongly believe a combined
company would create more opportunities and provide more benefits for
our collective customers, employees, shareholders and society in
general,” said Michael McGarry, PPG chairman and chief executive officer.

“We made a final attempt for engagement late last week and through a
letter to AkzoNobel (attached). In that letter, we addressed AkzoNobel’s
stated commentary around value, certainty, timing and stakeholder
considerations, and provided additional and specific commitments and
assurances including a significant break-fee and an offer to negotiate a
nominal price increase as part of an agreed transaction. However,
AkzoNobel’s Boards have consistently refused to engage and did not
respond to our call or letter. 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.

“As always, PPG remains focused on identifying growth opportunities that
will drive value and strengthen our company. We remain committed to our
longstanding disciplined approach to business portfolio management and
cash deployment.

“I want to thank PPG’s many employees for their interest and support
throughout this process, especially those who work within our facilities
in the Netherlands. I also want to thank those stakeholders in the
Netherlands who were open to and welcomed the opportunity to learn about
the possibilities that a business combination could provide. We are
proud to call the Netherlands home to many of our employees and
businesses, and we look forward to our continued growth in this
important country.”

To view the previous announcements related to PPG’s proposal to combine
with AkzoNobel, click
here. To learn more about PPG, visit www.ppg.com.

This is a public announcement by PPG pursuant to the provisions of
section 4 paragraph 3 of the Decree on Public Takeover Bids (Besluit
openbare biedingen Wft) of the Netherlands. This announcement does not
constitute an offer, or any solicitation of any offer, to buy or
subscribe for any securities. This announcement is not for release,
publication or distribution, in whole or in part, in, into or from,
directly or indirectly, any other jurisdiction in which such release,
publication or distribution would be unlawful.

PPG: WE PROTECT AND BEAUTIFY THE WORLD™

At PPG (NYSE:PPG), we work every day to develop and deliver the paints,
coatings and materials that our customers have trusted for more than 130
years. Through dedication and creativity, we solve our customers’
biggest challenges, collaborating closely to find the right path
forward. With headquarters in Pittsburgh, we operate and innovate in
more than 70 countries and reported net sales of $14.8 billion in 2016.
We serve customers in construction, consumer products, industrial and
transportation markets and aftermarkets. To learn more, visit www.ppg.com.

Forward-Looking Statements

This press release contains certain statements about PPG Industries,
Inc. (“PPG”) that are “forward-looking statements” within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. These matters
involve risks and uncertainties as discussed in PPG’s periodic reports
on Form 10-K and Form 10-Q, and its current reports on Form 8-K, filed
from time to time with the Securities and Exchange Commission (“SEC”).
The forward-looking statements contained in this press release include
statements about the proposed business combination with Akzo Nobel N.V.
(“AkzoNobel”) by PPG (such proposed business combination, the
“Transaction”) and the expected benefits of the Transaction for PPG,
AkzoNobel and their respective shareholders. Without limitation, any
statements preceded or followed by or that include the words “targets,”
“plans,” “believes,” “expects,” “intends,” “will,” “likely,” “may,”
“anticipates,” “estimates,” “projects,” “should,” “would,” “could,”
“positioned,” “strategy,” “future,” or words, phrases or terms of
similar substance or the negative thereof, are forward-looking
statements. These statements are based on the current expectations of
the management of PPG and are subject to uncertainty and to changes in
circumstances and involve risks and uncertainties that could cause
actual results to differ materially from those expressed or implied in
such forward-looking statements. In addition, these statements are based
on a number of assumptions that are subject to change. Such risks,
uncertainties and assumptions include: PPG’s future actions with respect
to AkzoNobel, whether AkzoNobel’s management or supervisory boards will
engage with PPG to discuss any future transaction and the form and
nature of future PPG growth opportunities. However, it is not possible
to predict or identify all such factors. Consequently, while the list of
factors presented here is considered representative, no such list should
be considered to be a complete statement of all potential risks and
uncertainties. Unlisted factors may present significant additional
obstacles to the realization of forward-looking statements.
Forward-looking statements included herein are made as of the date
hereof, and PPG undertakes no obligation to update publicly such
statements to reflect subsequent events or circumstances.

We protect and beautify the world is a trademark and the PPG
Logo is a registered trademark of PPG Industries Ohio, Inc.

29 May 2017

Antony Burgmans
Chairman of the Supervisory Board
Akzo Nobel
N.V.
AkzoNobel Center
Christian Neefestraat 2
1077 WW
Amsterdam
The Netherlands

Dear Mr. Burgmans,

Thank you for your reply to my email last week requesting a call with
you. We continue to believe that having in-person discussions, with each
party negotiating in good faith, is the only path to ensuring that
AkzoNobel secures the most beneficial outcome for its stakeholders.
Although you declined to have my requested 5 minute call, you indicated
you would be open to receiving our views in writing. As a result, I am
providing you with this letter.

We will not go into detail about the many benefits we believe would
inure to AkzoNobel and all of its stakeholders through a transaction
with PPG. Our previous letters adequately convey our enthusiasm for a
business combination and genuine view of the benefits of a potential
transaction, as well as the many strong commitments we are willing to
make to provide comfort that a transaction will indeed be beneficial to
AkzoNobel and its stakeholders. However, we wish in this letter to make
the following points clear:

Value

Despite the fact that your shareholders are strongly supportive of the
price proposed in our previous offer, which would deliver a 50% premium
to your undisturbed trading price, we are willing to discuss a further
increase to obtain the support of the Supervisory Board and Management
Board of AkzoNobel for an agreed deal. Clearly a good faith engagement
to both due diligence and confirmation of a joint work plan for the
antitrust review process would enable us to offer the highest price.
Accordingly, we are only willing to discuss a nominal increase in price
in the context of in-person negotiations in which all other non-price
issues have been resolved. Any adjustment in price would take into
consideration the value of the non-price commitments that we have
mutually agreed upon. We would need clear evidence that you have
authorized a team to seek an agreement on the combination of our
companies.

Timing of Closing

In your public responses to our previous offers, you have cited concern
about the time it would take to consummate a transaction. As we have
said, and as we have offered to demonstrate to you in private
discussions between our respective antitrust counsels, we are confident
that a business combination can be consummated on a timely basis if we
act in a coordinated and constructive manner. Our target for closing in
an agreed deal would be 15 months from signing. The agreement between
the parties would reflect a 12-month timeline with two 3 month
extensions to receive regulatory approvals. To demonstrate our
confidence in our analysis thus far, and in our ability and commitment
to obtain the necessary approvals on a timely basis, we are willing to
commit to a ticking fee payable to AkzoNobel shareholders in the amount
of Eur 0.10 per share each month that would start to accrue upon the
15-month anniversary of the execution of a merger agreement.

Certainty

As we have stated previously, we are prepared to commit to an agreed
level of divestitures to the extent necessary to obtain antitrust
approvals for the transaction. We believe the agreed level should be
part of the negotiation following discussions between our respective
antitrust counsel, but to give you a sense of the order of magnitude, we
would expect the agreed level would be approximately 10% of the paints
and coatings revenues of the combined company and we would be willing to
have our experts share our analysis with appropriate arrangements. To
give you additional assurance on our commitment, we have also stated
previously that we are willing to agree to a significant reverse
break-up fee that would be payable if the transaction failed to be
consummated as for antitrust reasons. To provide further specificity, we
are willing to agree to a break-up fee in the amount of Eur 600 million.

To further ameliorate any concerns about the risk of losing key
employees during the pendency of a transaction, we would be willing to
establish a management retention pool of Eur 20-50 million to
incentivize key employees to remain with the combined company. The
amount we would be willing to commit would depend on the number of
employees involved. However we would expect this retention pool would
include only your top talent. We would hope to get your input on the
most effective way to implement such a retention pool so that the
combined company will have the benefit of the expertise and experience
of the AkzoNobel management team after the closing of the transaction.

Stakeholder Commitments

In your response to our previous offer, you noted specifically that we
had not proposed a mechanism by which the many non-financial covenants
we have proposed would be enforced. To the extent it was not entirely
clear to AkzoNobel that we would be willing to ensure that the
non-financial commitments are enforceable, we make that clear now. We of
course would expect that the customary enforcement mechanism for
non-financial covenants would be in place in a business combination
between our two companies. Specifically, after the closing, the
Supervisory Board would retain two independent, continuing members from
the AkzoNobel Supervisory Board. Any deviation from the non-financial
covenants for the duration of those covenants would require the consent
of these independent Supervisory Board members.

We would be willing to make more specific stakeholder commitments in
other areas, including, research and development, sustainability and
employment, but in order to mutually agree on the proper ones, we would
like due diligence and your involvement in this process. At a minimum,
PPG is prepared to honor any and all commitments that AkzoNobel has
previously made.

Conclusion

As you know, time is short for our companies to enter into a consensual
transaction for the benefit of our stakeholders, and so we would
appreciate your prompt response and good faith engagement.

Sincerely,

/S/ M H McGarry

Michael H. McGarry
Chairman and Chief Executive Officer

cc: Mr. Ton Büchner

Contacts

PPG Media:
Bryan Iams, +1-412-434-2181
Corporate
Communications
[email protected]
or
PPG
Investors:
Scott Minder, +1-412-434-3466
Investor Relations
[email protected]
investor.ppg.com