A COATINGS firm expanding North-East operations has unveiled a restructuring plan to sweeten investors frustrated by a £19bn takeover snub.

AkzoNobel is looking to sell or spin off its chemicals business, saying the “vast majority” of net proceeds will be returned to shareholders.

The move comes just days after the business, which has also laid out proposals to pay investors £1.3bn in extra dividends, rebuffed approaches from rival PPG Industries.

The company, which chalked up a 13 per cent rise in earnings to £314m in the first quarter of this year, said the advances of PPG, which runs a factory in Shildon, County Durham, undervalued the firm and would trigger job cuts.

PPG claims the organisations “will be stronger together” and AkzoNobel has faced shareholder revolt from investors keen for talks to start.

However, in another apparent rebuke, AkzoNobel, which previously unveiled £10.7m plans to bolster operations at a Gateshead research hub and secure hundreds of jobs, said its new strategy “will create substantial value for shareholders with significantly less risks and uncertainties compared to alternatives”.

Ton Büchner, chief executive, said the decision to separate its specialty chemicals business from its paints and coatings operation was a logical step, since the latter is experiencing strong growth.

He said: “Our commitment to substantial shareholder returns reinforces our belief that the plan we are outlining will create a step change and generate significant shareholder value in the short, medium and long-term.

“Now is the right time to create two high-performing businesses (and) we see extensive growth momentum in our paints and coatings business, which we expect to keep growing faster than market rates.”

Mr Büchner added he expects the business to sell or list its chemical division, which accounts for about a third of sales and profits, in the next year, revealing it will deliver £42m in savings.

AkzoNobel says its North-East expansion plan will bring together more than 100 scientists, who will operate from the firm’s existing base in Felling, Gateshead, and work on next generation products to protect steel and concrete structures from corrosion, abrasion and fire.

The business, known for its Dulux and Cuprinol brands, has also spent millions on a new paint making factory in Ashington, Northumberland, which is expected to create an initial 120 direct jobs.

However, Michael McGarry, PPG’s chairman and chief executive, said the firm would achieve more alongside his company, raising concerns over the merits of AkzoNobel’s new proposals.

Revealing PPG first approached its rival in 2013, he added: “We believe AkzoNobel’s plan will be more risky, create more uncertainty and create less value than our proposal.

“It is now time for management and boards to meet and complete a full review of the opportunity to combine.”