Published on November 26th 2017 in

Axalta’s suitors – first AkzoNobel, now Nippon Paint

Earlier this month, both AkzoNobel and Axalta Coating Systems confirmed that they had engaged in discussions about a possible merger of the two global coatings companies. Initially, Reuters reported that unnamed sources indicated that the Netherlands-based AkzoNobel and the Philadelphia-based Axalta had begun conversations exploring the merger of the two coatings businesses.

Gaining momentum, the Wall Street Journal also published an article, again quoting unnamed sources, that the two coatings manufacturers were engaged in merger talks.

The financial press coverage led AkzoNobel to respond to the news about the possible merger stating: “In response to market speculation, AkzoNobel confirms 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.” Axalta also released a statement saying, “Axalta confirmed that it is engaged in discussions with AkzoNobel regarding a potential merger of equals transaction between Axalta and Akzo’s Paints & Coatings business. 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. There can be no assurances that a definitive agreement between the parties will be reached or on what terms.”

However, last week both Axalta Coating Systems and AkzoNobel subsequently confirmed that the companies were unable to reach mutually agreeable terms.
Thierry Vanlancker, CEO of AkzoNobel, said: “I am confident that our current strategy (including the separation of the AkzoNobel Specialty Chemicals business) remains on track and offers significant value for shareholders and other stakeholders in the short, medium and long term. We remain focused on our strategic options to continue to develop our business and improve profitability in the future.” Earlier this year, AkzoNobel rebuffed an unsolicited merger offer from PPG Industries that sought to combine their coatings operations. At the time, AkzoNobel said it had concerns about antitrust implications with the proposed merger and offered an alternative plan that responded to shareholder concerns about the firm’s performance. PPG ultimately declined to make a hostile takeover for AkzoNobel.

Charles W. Shaver, Axalta’s Chairman and Chief Executive Officer, said: “After pursuing a potential combination of Axalta and AkzoNobel, we concluded we could not negotiate a transaction on terms that meet our criteria,” “Any transaction we ultimately agree to needs to generate superior long-term value for Axalta shareholders as compared to the continued execution of our strategic plan.” However, the following day Mr Shaver announced: “Axalta confirms that it is engaged in discussions with Nippon Paint regarding a potential acquisition of Axalta. 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. There can be no assurances that a definitive agreement between the parties will be reached or on what terms.”

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