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Amsterdam - Akzo Nobel NV Chief Executive Officer  Ton Buechner said breaking up the centuries-old Dutch paintmaker is less risky and provides faster returns for shareholders than a $24 billion takeover approach from rival PPG Industries Inc, as he sought to rally investors to his side.

The Amsterdam-based company proposed to carve out its specialty chemicals division within 12 months and return 1.6 billion euros ($1.7 billion) to shareholders, according to a statement Wednesday. The payout for this year will include a 1 billion-euro special dividend as well as a 50 percent rise in the regular one.

“This is the better plan,” Buechner said in an interview with Bloomberg TV. “Other plans would actually have significant time required for regulatory approval.”

Buechner’s strategy that also includes new financial targets will be a tough sell in his battle against Pittsburgh-based PPG. The 51-year-old Dutch national needs to convince those shareholders urging him to engage with the US suitor after Akzo Nobel rejected as too low a second and sweetened proposal of 88.72 euros a share.

The CEO reiterated that stance during a presentation in London on Wednesday to analysts and investors.While the company’s pledge for extra cash for shareholders is promising, the earnings goals “are a huge stretch,” according to Bernstein analyst Jeremy Redenius. He estimated they could lift Akzo Nobel’s value to between 85 euros and 93 euros a share, although “Buechner will have a huge challenge” to show how the company can get there.

Akzo Nobel shares

Akzo Nobel shares gained 1.3 percent to 79.32 euros in Amsterdam trading as of 1:54 p.m. local time. This values the company at 20 billion euros.

“The increase in financial guidance is much more substantial than I had expected,” said  Joost van Beek, an analyst at Theodoor Gilissen Bankiers. “It’s all about the explanation, how dependent are they of a solid external environment, and what would they be able to reach internally.”

Recent developments in the back and forth between the two companies have taken a more hostile tone, with PPG CEO Michael McGarry this week appealing directly to Akzo Nobel shareholders with his rationale for the deal. Activist investor Elliott Management Corp. is seeking to force a special shareholders’ meeting to oust the company’s chairman. Buechner said a response to Elliott’s demand will be made “soon.”

At the London meeting, an Elliott representative faulted Akzo Nobel’s board for failing in its corporate governance duties by not providing a detailed comparison of the two competing plans for the company. The CEO rejected the charge, saying his presentation is “about our plan on value going forward.”

The Dutch maker of coatings said it will run a dual-track process for the separation of the specialty chemicals business to consider a listed entity or a sale. Akzo Nobel also outlined 150 million euros in annual cost savings and an extra 50 million euros in savings from the proposed carve out.

Unlock Value

Separation of specialty chemicals will unlock value and allow easier comparisons with peers, Buechner said, adding the division won’t be sold in separate parts. He also said Akzo Nobel’s new plan might allow for smaller bolt-on acquisitions, although bigger deals would be excluded in the short term., Akzo Nobel reported better-than-expected results in the first quarter.

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Earnings before interest and taxes through March jumped 13 percent to 376 million euros, versus an average estimate of analysts surveyed by Bloomberg of 338.8 million euros.

PPG has outlined $750 million in cost savings from a combination with Akzo Nobel at a time when prices for raw materials including the widely used TiO2 white pigment are on the increase. Akzo Nobel Chief Financial Officer Maelys Castella said the company is putting in place its own savings measures to deal with inflation.

The Dutch maker of Dulux and Sikkens paint set a target of 14 percent return on sales by 2020, including 15 percent for its paint and coatings business and 16 percent for specialty chemicals, it said, predicting its third straight year of record profit.