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AkzoNobel, Axalta Confirm Merger Talks

Tuesday, October 31, 2017

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After reports released late last week, coatings giant AkzoNobel (Amsterdam) confirmed Monday (Oct. 30) that it is in talks with Axalta Coating Systems (Philadelphia) about a potential merger that reports say would create a $30 billion company.

News service Reuters first reported Friday (Oct. 27) that sources said the two firms were in talks; AkzoNobel confirmed the rumor early Monday with a brief statement. The company added that its previously revealed plan to spin off its Specialty Chemicals business is proceeding as planned.

AkzoNobel Merger Past

The news comes months after AkzoNobel rebuffed Pittsburgh-based coatings heavyweight PPG, which came to the Dutch firm with three merger offers this spring. AkzoNobel management declined to negotiate during the highly public and at times contentious courtship, and the company’s refusal to engage with PPG led to a lawsuit brought by an activist hedge fund that became AkzoNobel’s largest shareholder during that period of time.

AkzoNobel headquarters
AkzoNobel

Amsterdam-based AkzoNobel confirmed Monday that it is in talks with Axalta Coating Systems (Philadelphia) about a potential merger of equals.

At the time of PPG’s first offer, AkzoNobel presented an alternative plan to unlock revenues, involving the spinoff of its Specialty Chemicals business as a separate entity. In the subsequent months, the company underwent a series of management changes.

Former CEO Ton Büchner resigned in July, citing health reasons, and was replaced by Thierry Vanlancker. Chief Financial Officer Maëlys Castella took a leave of absence beginning in September, also citing health reasons, and is expected to return in a different role. Maarten de Vries was later named to the CFO role. Supervisory Board Chair Antony Burgmans, whom hedge fund Elliott Advisers sought to remove in the wake of the PPG situation, is in his final year in his position.

About the Players

AkzoNobel, which reported 14.2 billion euros in revenue last year, is one of the world’s largest paints and coatings manufacturers, with brands including International Paint, Devoe High Performance Coatings and Resicoat in the protective and marine segment, and Dulux, Sikkens and Interpon Powder Coatings in the architectural and commercial market.

Axalta, which formed when DuPont Performance Coatings rebranded in 2013, is best known for products in the automotive OEM, automotive refinish and industrial markets. The Philadelphia company reported net sales of about $4.1 billion in 2016.

Both AkzoNobel and Axalta reported revenue growth in the third quarter of 2017, in reports issued earlier this month. AkzoNobel’s total revenues were up about 1 percent over prior-year numbers, while Axalta’s revenues were up 6.8 percent versus the third quarter of 2016.

Axalta research
Axalta

Axalta, which formed when DuPont Performance Coatings rebranded in 2013, is best known for products in the automotive OEM, automotive refinish and industrial markets.

While AkzoNobel’s statement Monday called the talks “constructive” and added little else in the way of detail, Axalta issued its own statement with some caveats.

“Axalta will pursue such a transaction only if its Board of Directors determines that it is in the best interest of Axalta to do so,” the statement reads. “There can be no assurances that a definitive agreement between the parties will be reached or on what terms.”

The merger talks come amid a series of blockbuster deals in the coatings and specialty chemicals industries. Earlier this year, The Sherwin-Williams Company (Cleveland) completed its acquisition of Valspar (Minneapolis) and chemical giants The Dow Chemical Company and DuPont closed a merger. Last week, chemical firms Huntsman Corporation (The Woodlands, Texas) and Clariant (Muttenz, Switzerland) announced that their planned merger has been abandoned amid criticism from activist investors.

Axalta Growth

Axalta has announced a series of acquisitions over the course of 2017 thus far, including:

   

Tagged categories: Acquisitions; AkzoNobel; Axalta; Business matters; Mergers

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