Akzo-Axalta merger to further consolidate automotive coatings market

Akzo Nobel NV, a Dutch paints and coatings multinational major, has been reportedly planning to join hands with one of the most dynamic, prominent players of automotive coatings market – the Philadelphia headquartered Axalta Coating Systems. The Amsterdam-based producer of bulk and specialty chemicals plans to nearly double the size of its paints business to create a deterrent, on the grounds of which the tie-up Axalta has been planned, cite reports. Company sources claim that the automotive coatings market player’s top officials are still amidst serious discussions with Axalta’s representatives regarding the proposed ‘merger of equals’, to create a joint enterprise that would be a global leader in the paints and coatings domain.

For the uninitiated, Axalta is the world’s largest producer of auto refinish paints and has established a considerably strong presence across automotive coatings industry, with a current valuation of more than USD 8 billion. Akzo Nobel’s decision to join forces with the bulk and specialty chemicals maker comes on the heels of the fact that the Amsterdam-based firm’s newest rival in the market, PPG Industries, has been planning to buy out another stake in the company, in accordance with the norms mandated under the Dutch acquisition laws. So far, this year, Akzo Nobel has successfully evaded a purchase offer of USD 29 billion, for which the firm is already under the scanner of the Elliott Management Corp. Now, the company aims to avoid PPG’s potential takeover by pushing its talks further for a merger with the coatings giant.

The Dutch paints behemoth mentioned that the Akzo-Axalta deal may have to go through a rigorous authoritative framework, however, experts cite that the deal would be the major driving force behind further consolidating the automotive paints market.

Post the announcement of Akzo’s supposed merger discussions with Axalta, the former’s shares rose by 0.6% to EUR 77.92 in Amsterdam, leading to a market value of EUR 20 billion. Axalta, the automotive coatings market giant, on the other hand, rose 17% after the merger talks made it to the headlines.