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Nippon Paint confirms bid for Axalta

November 22, 2017
Energy & Chemical Value Chain

Nippon Paint Holdings (Osaka), Japan’s largest paint producer, has confirmed that it has made a proposal to acquire Axalta Coating Systems.

Nippon Paint said there was no guarantee its offer would be successful and declined to give any other information. A report on Reuters says the all-cash offer, made on Tuesday, may have led Axalta and AkzoNobel to end their merger talks.

Axalta and AkzoNobel announced on Tuesday that they had decided to end talks, having failed to reach an agreement to combine in a merger of equals. Axalta chairman and CEO Charles Shaver said Axalta “concluded we could not negotiate a transaction on terms that meet our criteria.” Those criteria include generating greater shareholder value than the company’s plans would as an independent entity. Analysts say that to be credible enough to cause Axalta to end talks with AkzoNobel, any bid from Nippon would have to be around $36.50 per share, a 30% premium to Axalta’s undisturbed share price, valuing the US company at around $8.9 billion. They add that there appear to be no significant antitrust obstacles to such a merger, which would combine the world’s number five and six paintmakers.

Nippon Paint reported sales of ¥470.16 billion ($4.07 billion) in 2016, a drop of 12% on the previous year. The company said earlier this year that for 2017 it plans to reach sales of ¥577 billion, operating profit of ¥81 billion and operating margin of 14.0%. Of that total, Japan should account for 31%, the rest of Asia 53.4%, the Americas 12% and others 2.3%.

Nippon Paint has been an active acquirer in recent few years. In the United States it bought Dunn Edwards Paints in March this year, expanding its decorative paints franchise, and in Europe it turned Bollig & Kemper into a wholly owned subsidiary in January last year, reinforcing its presence in the OEM market. In January this year it turned CRF Shenzhen into a wholly owned subsidiary expanding its industrial wood coatings market in China.

In a presentation to shareholders, Nippon Paint said in August that it accounts for 4% of the global paints market, one rank ahead of with Axalta with a 3% share. Sherwin Williams, following this year’s acquisition of Valspar, is the largest with 13%, followed by PPG, with around 12%, and AkzoNobel with 9% of the total. Nippon Paint said its target for this year is to gain a foothold to becoming a leading player and by 2020 to become a leading player.

By Natasha Alperowicz

Source: Chemical Week

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