Issue Date: November 6, 2017
AkzoNobel, Axalta in talks
AkzoNobel says it is in talks to merge with its smaller U.S. paint rival Axalta Coating Systems, which is DuPont’s former coatings business. Discussions are at an early phase, according to the Dutch company. AkzoNobel has annual paint and coating sales of about $10 billion, compared with $4 billion for Axalta. Jefferies stock analyst Laurence Alexander describes the prospective deal as “a bold move with a good strategic fit.” Combining the two firms could generate savings by addressing overlaps in business lines and geography and by leveraging economies of scale in raw material purchasing, Alexander tells clients. A merger with Axalta could also protect AkzoNobel from being acquired. The Dutch firm rebuffed three attempts by PPG Industries to acquire it earlier this year. Under Dutch regulations, PPG can make another bid in December. The prospective merger follows a turbulent year for AkzoNobel, whose CEO stepped down in the summer because of ill health. The firm says it remains on track to carve out its chemicals activities into a separate business by April 2018.
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