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Akzo confirms merger talks with Axalta

Akzo Nobel

Dulux owner Akzo Nobel has confirmed this morning that they're in merger talks with US competitor Axalta Coating Systems, which if it went ahead, would create a $30 billion new company.

In recent months the Dutch based paint maker has been under real pressure, having fought off a takeover attempt by PPG, issued two profit warnings, as well as losing its CEO and CFO both due to ill health.

Read - Akzo issues profit warning after CFO stands down

Read - Akzo CEO resigns with immediate effect

The company has announced that it's in "constructive talks" with the board of Axalta, following market speculation about a possible deal. Akzo said merging with Axalta, whose truck coatings business fills a hole in its portfolio, would "create a leading global paints and coatings company."

Akzo has a current market capitalization of 19.5 billion euros ($22.7 billion), while Axalta is worth $8.1 billion at Friday's closing price of $33.15.

Analyst Joost van Beek of Theodoor Gilissen said the timing of the Axalta deal will be difficult, and Akzo's management is under pressure to pull it off. "There is a large risk that Akzo will pay too much, as it is clear that they want to stay out of the hands of PPG, and Axalta knows that."

Sources close to the companies told Reuters on Friday that talks were at an early stage and there was no guarantee the companies would come to an agreement.

Source: Insight DIY Team

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30 October 2017

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