(Reuters) - Activist hedge fund Trian Fund Management said on Thursday that it wants to replace PPG Industries' PPG.N chief executive with his predecessor and suggested that the U.S. paints and coatings company be broken up.

A PPG Industries precipitated silicas plant is pictured in West Lake, Louisiana, U.S., June 12, 2018. REUTERS/Jonathan Bachman

Trian, which now owns 2.9 percent of PPG, said in a presentation at an investment conference that it urged PPG to bring back Chuck Bunch as chief executive to replace Michael McGarry, who is currently chairman and CEO.

Since Bunch left in 2015, PPG has underperformed, Trian said. Trian pointed to PPG’s Oct. 8 profit warning and restatement of financial statements because of accounting irregularities as evidence of problems at the company.

PPG earlier on Thursday issued a strong defense of its CEO saying that the board unanimously backed McGarry.

Trian wants the company to break itself into two separate and publicly traded companies, which it said would eventually allow room for more strategic acquisitions in the future.

A separation could unlock “an additional 15 percent to 40 percent of shareholder value,” Ed Garden, Trian’s chief investment officer and a founding partner, said at the conference where he spoke about the investment in detail.

Trian, co-founded by Nelson Peltz, said two weeks ago it now holds 7 million shares of PPG. PPG shares were trading up 3.12 percent at $100.79 on Thursday, but are still down 16.74 percent since the start of the year.

Trian's largest investments are General Electric Co. GE.N and Procter & Gamble PG.N, where the firm has board seats. Trian's main fund returned 1.7 percent in the first nine months of the year, an investor in the fund said.

Trian’s public push to oust McGarry is highly unusual for a firm that has put a premium on saying it works collaboratively with target companies and largely tries to stay out of the headlines.

But “after three years of significant underperformance driven by operating and strategic mishaps, we believe change is warranted and now is the right time to bring back Chuck Bunch,” Trian said in a statement.

Trian also wants to eliminate the company’s practice of re-electing only a portion of its board instead of the entire group every year, saying such a step would bring it in line with other large U.S. companies.

PPG said in a statement it believes its strategic plan has positioned the company for growth. “We have emphasized returning cash to shareholders, dedicating about 65 percent of our cash deployment in 2016 and 2017 to dividends and share repurchases - $2.7 billion in total - with an additional $1.6 billion through the first three quarters of 2018.”

The company said they would be open to listen to Trian on other topics.