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Axalta and Nippon Paint abandon deal talks

December 1, 2017
Chemical Value Chain

Axalta has ended merger discussions with Nippon Paint, a Japanese rival. Nippon Paint “informed Axalta that it was unwilling to meet our expectations regarding the value of the company and assume the financial leverage necessary for deal of this size,” Axalta says.

News of merger talks between Axalta and Nippon Paint broke on 22 November, one day after Axalta and AkzoNobel terminated their own merger discussions. Axalta could be worth as much as $43/share, according to Laurence Alexander, an analyst with Jefferies (New York). The exact size of Nippon’s bid for Axalta, which a Reuters report says was made on 21 November, has not been disclosed. Analysts speculated that Nippon’s bid would have had to total at least $36.50/share to prompt Axalta to end discussion with AkzoNobel.

The combined company would have generated about $8 billion/year in sales. Nippon Paint is the largest paint maker in Asia, while Axalta is a top-two global player in automotive coatings.

Shares in Axalta are currently trading at around $31, but dipped sharply after the termination of the talks was announced early this afternoon. Alexander says investor focus is likely to shift away from M&A, as discussions with Nippon and AkzoNobel went nowhere. “While some M&A premium may linger…for the most part we expect investors to shift their focus back to end-market trends, pricing, and small-bore consolidation opportunities,” he says.

By Vincent Valk

Source: Chemical Week

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