AkzoNobel has reacted to the unsolicited takeover bid by US rival PPG Industries and is to assuage its own activist shareholders by announcing plans to hive off its special chemicals unit and using the proceeds from the sale to boost its dividend.

The besieged Amsterdam paint and coatings group said the sale of the chemicals unit or an IPO will take place within 12 months and that project teams are already in place.

AkzoNobel announced the plans at a meeting for analysts in London. ‘Now is the right time to create two focused, high-performing businesses. This strategy will create substantial value for shareholders with significant less risks and uncertainties compared to alternatives,’ chief executive Ton Büchner said.

Pittsburgh-based PPG has offered €22.4bn for the entire company.

AkzoNobel is also planning to reduce costs by an annual €150m while expenditure will decrease by another €50m a year once the chemicals division is sold off.  The company will invest €1bn in R&D over the next three years.

The company is proposing to increase its dividend by 50% to €2.50 per share in addition to a special dividend worth €1bn in November.