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Dutch paint maker Akzo Nobel is splashing into US with plans to buy Philadelphia-based rival Axalta Coating Systems for roughly $9.2 billion in stock. The move will create the world’s second-largest coatings company, trailing only Cleveland-based Sherwin-Williams.
The deal is part of a wave of consolidation that recently saw private equity firm Carlyle buy BASF’s coatings unit for €5.8 billion. Under the terms of the deal, Akzo Nobel will hold 55% of the combined company, with shares moving from Amsterdam to New York. The resulting company will have around $17 billion in revenue and a $25 billion enterprise value.
The companies have a history, with merger talks dating back to 2017, but they “could not negotiate a transaction” that met their “criteria,” Axalta’s then-CEO Charles Shaver said at the time.
Private equity firms circled Axalta in 2019; Clayton, Dubilier & Rice was among the firms considering a bid alongside PPG Industries. Platinum Equity reportedly partnered with Koch Industries Inc. to also make an offer.
Akzo and Axalta agreed to frame the transaction as a “merger of equals,” with Akzo Nobel investors receiving a special €2.5 billion cash dividend, while the new board will feature four directors from each company plus three independents. Current Akzo Nobel CEO Gregoire Poux-Guillaume will lead the combined firm, with Axalta Board Chair Rakesh Sachdev taking the helm at the new board.
“Management has its work cut out convincing investors this is the right step,” Bernstein analyst James Hooper noted wryly. “Revenue growth expectations need some serious color.”
The merger combines strengths in consumer brands like Dulux, Cuprinol, and Hammerite with Axalta’s industrial coatings, including powder coatings for cars. The unified company will operate in over 160 countries. It aims to realize $600 million in run-rate synergies, 90% of which are expected within three years.
The combined entity’s headquarters will remain in Amsterdam and Philadelphia.
