AkzoNobel May Sell Consumer Paints Business in India, Retain Industrial Coatings
AkzoNobel N.V. is reportedly considering selling its consumer paints business in India while retaining its industrial coatings segment. Three potential contenders – Pidilite Industries, JSW Paints, and Indigo Paints – are preparing to submit financial bids for the consumer paints unit.
Valuation Expectations
The company expects a valuation of $1.5-1.7 billion for its business-to-consumer (B2C) paints unit. The bidding process is progressing into the second round of discussions. Pidilite is likely to bid independently, while JSW Paints may partner with private equity firms Blackstone or TPG. Indigo Paints is reportedly in discussions with Advent International or Warburg Pincus.
Strategic Review and Potential Full Exit
AkzoNobel, the largest paintmaker in Europe, initiated a strategic review of its India business last year. While it currently plans to retain its industrial coatings division, a complete exit could potentially increase the overall deal valuation to $2.2 billion.
Challenges in Selling Industrial Coatings
Selling the industrial coatings segment may present challenges due to intellectual property protections and long-term contracts, including agreements with the Indian Navy. The coatings business requires deep technical expertise and long-term industrial tie-ups, making a potential sale complex.
Competitive Landscape
Asian Paints, the largest paintmaker in India, operates its industrial coatings business through a joint venture with US-based PPG Inc. Kansai Nerolac and Nippon Paints also maintain strategic global partnerships. Acquiring AkzoNobel’s coatings business would necessitate multiple new arrangements.
Bidding Process and Key Valuation Factors
The bidding process requires contenders to specify their willingness to pay for each asset. Due diligence will commence based on these bids and is expected to take four to five months. AkzoNobel India's robust distribution network, comprising approximately 8,000 dealers, will be a crucial factor in determining the valuation.
Deal Structure and Stakeholder Responses
The Dutch parent of AkzoNobel India is reportedly seeking an all-cash deal rather than a share swap. When contacted, multiple stakeholders declined to comment.
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