AkzoNobel confirms merger talks with Axalta
The announcement comes months after rejecting a major takeover offer by PPG Industries.
Dulux owner AkzoNobel has confirmed it is in talks over a potential merger with US firm Axalta, just months after rejecting a multibillion-pound takeover bid by US rival PPG Industries.
The Dutch firm made the announcement “in response to market speculation”, following a string of reports last week.
“AkzoNobel confirms today it is currently in constructive discussions regarding a merger of the AkzoNobel Paints & Coatings business with Axalta.
“This will create a leading global paints and coatings company through a merger of equals,” the company said.
The combined business could be valued at around 30 billion US dollars (£22.8 billion), according to a report by the Financial Times.
AkzoNobel confirmed that the planned separation of its specialty chemicals business was still on track for April 2018 and was not affected by the discussions.
Experts suggest that the potential deal with Axalta may be a strategic move by AkzoNobel, which is hoping to stay independent after staving off an acquisition by PPG Industries earlier this year.
Jefferies analyst Laurence Alexander said it was “a plausible move, with attractive synergies and a good strategic fit, but the timing suggests the AkzoNobel board wants to block off any possibility of losing its independence.
“If the discussions proceed at the same pace as other recent chemical transactions, AkzoNobel could commit to a transaction value before realising the monetisation of its chemicals business,” he added.
AkzoNobel faced strong criticism for its rejection of PPG’s 27 billion euros (£24 billion) takeover bid, which sparked a long-running dispute with activist investor Elliott Advisors over the way the paint maker is run before reaching a truce in August.
But AkzoNobel went on to issue a profit warning in September, amid unfavourable foreign exchange rates, headwinds in the marine and protective coatings industry, manufacturing and supply chain disruption, and margin pressure from greater-than-expected raw material cost inflation.
While full-year earnings are expected to be higher than last year, the firm said the figures will be “less than the previously communicated increase of 100 million euros (£91.7 million)”.
Akzo also said it was implementing a new management structure and additional measures to ensure it hits its 2020 financial guidance.