October 2, 2018 / 9:32 AM / 9 months ago

Akzo Nobel to return 5.5 billion euros to shareholders after division sale

Cans of Dulux paint, an Akzo Nobel brand, are seen on the shelves of a hardware store near Manchester, Britain, April 24, 2017. REUTERS/Phil Noble/Files

AMSTERDAM (Reuters) - Dutch paintmaker Akzo Nobel said on Tuesday it would return 5.5 billion euros ($6.4 billion) to shareholders after the sale of its speciality chemicals division closed this week, fulfilling a promise made in March to give shareholders a large majority of the proceeds.

The company said it would buy back 2.5 billion euros of shares and distribute 1 billion euros in a special dividend. In addition, it will distribute 1 billion euros in paid-in capital.

Akzo sold its chemicals division for 10.1 billion euros to Carlyle Group in March, generating net proceeds of 7.5 billion euros.

Akzo previously paid shareholders an extra dividend of 1 billion euros late last year.

Akzo decided to sell its chemicals division early last year, as it fended off a 26-billion-euro takeover offer by U.S. rival PPG Industries .

The refusal to talk to PPG led to a bitter fight with a large group of shareholders who went to court in an unsuccessful bid to oust chairman Antony Burgmans.

The capital distribution announced by Akzo on Tuesday is noteworthy because such payments are not subject to a 15 percent withholding tax on dividends in the Netherlands. The dividend tax only affects foreign shareholders and is set to be eliminated.

Akzo said the share buyback is expected to be completed by mid 2020.

($1 = 0.8653 euros)

Reporting by Toby Sterling and Bart Meijer; editing by Amrutha Gayathri and Jason Neely

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