Akzo Nobel NV (IW 1000/240), Europe’s largest coatings company, rejected an unsolicited 20.9 billion-euro (US$22.1 billion) takeover bid from PPG Industries Inc. and said it may separate its specialty chemicals business to boost the stock price.

PPG’s bid, worth 83 euros a share at the end of February, substantially undervalued the company, Amsterdam-based Akzo said in a statement Thursday, confirming a Bloomberg News report that the U.S. company was exploring a deal. The bid is 29% above Akzo’s closing level Wednesday. Various “alternative ownership structures” are being considered for specialty chemicals, including a spinoff, the company said. Akzo shares rose the most in more than eight years.

Spurred on by PPG’s approach, Chief Executive Officer Ton Buechner is taking head-on the longstanding question whether Akzo Nobel would fare better as a focused coatings company, without the distraction of making chemicals ranging from commodities including chlorine to cosmetic ingredients. The specialty chemicals business had sales of 4.8 billion euros last year, accounting for 34% of revenue.

“Akzo Nobel has enjoyed a record performance in recent years in terms of profitability and has made significant strategic progress, allowing us to take this decision,” Buechner said in the statement.

Hostile Takeover Vulnerability

With national elections in the Netherlands next week, the offer adds to concern among Dutch politicians that the nation’s companies are vulnerable to hostile takeovers. Unilever, the Anglo-Dutch consumer products company, last month spurned an unsolicited, $143 billion approach from Kraft Heinz Co. PPG’s offer isn’t in the interest of the Netherlands, Dutch Economy Minister Henk Kamp said, according to Dutch news agency ANP.

The Netherlands should better guarantee the country’s strategic economic interests, Finance Minister Jeroen Dijsselbloem was cited as saying by Het Financieele Dagblad on Tuesday. He said 11 of 25 members of the benchmark stock index are insufficiently protected against hostile foreign takeovers.

PPG’s proposal carries “serious risks and uncertainties,” Buechner said. One of the CEO’s first major strategic decisions upon taking the helm in 2012 was to execute on the sale of Akzo Nobel’s U.S. decorative paints business to PPG for about $1 billion. Now the U.S. company is returning with an offer for the rest. The U.S. company offered 54 euros in cash and 0.3 of its shares for each Akzo share, the Dutch company said.

Akzo said both the management and supervisory boards, along with financial and legal advisers, reviewed the offer before coming to the conclusion that it fell short. The combined company also would have had too much debt, Akzo said.

‘Fully Committed’

While Buechner said he’s “fully committed” to rejecting PPG’s approach as it stands, he declined to be drawn on whether the door is open to discussions with its suitor should it return with a better offer. Whether there are attractive parts of PPG to combine with “is not a topic for today,” he said on a call with reporters.

“Any future proposition is pure speculation,” the CEO said.

Price wasn’t the only issue with PPG’s approach, as a combination would threaten research and development, thousands of jobs, as well as customer relationships, Buechner said. In any case, the expected synergies from a combination would be compromised by antitrust demands, he added.

Akzo said it didn’t initiate, nor encourage, or entertain any conversations with PPG.

After years of cost reductions and improving margins to industry standards, there’s a “strong rationale” for creating two focused businesses, Buechner said, and Akzo’s performance last year showed the time was right to contemplate separating specialty chemicals. PPG’s move just “pulled forward” this internal discussion, he said.

Akzo rose 14% to 73.60 euros at 9:10 a.m. in Amsterdam, the biggest advance since October 2008. Before today, the stock had returned an average of 11% annually the past five years including dividends, in line with the Stoxx 6000 Chemicals Index.

Unilever, fresh from fending off the Kraft Heinz approach, also vowed to boost shareholder returns with a strategic review that might point to a breakup of the consumer-goods giant.

By Andrew Noël and Ellen Proper