Nippon Paint Proposes $8.6 Billion Acquisition of AkzoNobel's Decorative Paints Unit Amidst M&A Rivalry

Deep News
07/13

Japanese paint manufacturer Nippon Paint Holdings Co., Ltd. announced on Monday that it has submitted a proposal to acquire the decorative paints business of Dutch chemical giant AkzoNobel N.V. for 7.5 billion euros (approximately $8.56 billion). This move represents Nippon Paint's latest attempt to disrupt the established merger plans between AkzoNobel and U.S. coatings company Axalta Coating Systems Ltd.

Previously, Nippon Paint, in a joint effort with U.S. company The Sherwin-Williams Company, had proposed a full takeover of AkzoNobel for 124.9 billion euros, followed by an asset split, but the offer was rejected. Nippon Paint and Sherwin-Williams announced the abandonment of their joint bid earlier last month. Regarding this new asset acquisition proposal, Nippon Paint stated that it has not yet made any final concrete decisions concerning the potential purchase. Following the news, shares of Nippon Paint closed down 2.1% in Japanese trading on Monday, while AkzoNobel's stock initially rose 3.8% in early European trading before paring some of those gains.

AkzoNobel's Formal Rejection

AkzoNobel subsequently issued a formal statement in response, asserting that Nippon Paint's latest offer significantly undervalues its decorative paints business. The company's Board of Management and Supervisory Board reiterated that, due to the competitive conflict between Nippon Paint's proposal and the currently progressing merger with Axalta, and in line with existing exclusivity agreement restrictions, the company is currently unable to engage in any substantive discussions with Nippon Paint. AkzoNobel's management emphasized that, based on the profound strategic fit and synergy potential of the merger agreement reached with Axalta last year, the boards continue to unanimously recommend the "merger of equals" with Axalta. According to the established schedule, shareholders of AkzoNobel and Axalta are scheduled to vote on the merger transaction on August 5.

Business Context and Market Impact

Industry data shows that AkzoNobel, a coatings giant owning brands like Dulux, derived approximately 40% of its revenue last year from its decorative paints business, with the remainder coming from its performance coatings segment. The company had previously initiated a strategic review of its decorative paints portfolio in Asia and sold its Indian business to India's JSW Group.

Market analysts widely note that, as of Monday's close, Nippon Paint's market capitalization was approximately $15.4 billion. If this nearly $8.6 billion acquisition were ultimately completed, it would significantly expand the global asset footprint of the Japanese coatings leader. Analysts at investment research firm Bernstein assessed in a note to clients that a subsequent acquisition by Nippon Paint following the completion of the AkzoNobel-Axalta deal remains a potential possibility. However, they noted that the current offer price is unlikely to gain acceptance, and they estimate such a transaction would likely not be finalized within 2026.

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