Akzo Nobel, Axalta in merger talks

Akzo Nobel, Axalta in merger talks

Potential deal comes after Akzo rejects $28.8 billion PPG offer.

November 7, 2017

Cleveland, Ohio – About six months after rejecting an unsolicited, $28.8 billion merger proposal from PPG, Dutch automotive paint supplier Akzo Nobel is considering merging with Axalta, the former paint division of DuPont.

In a news release, Axalta officials say they are “engaged in discussions with AkzoNobel regarding a potential merger of equals transaction between Axalta and Akzo’s Paints & Coatings business. Axalta will pursue such a transaction only if its Board of Directors determines that it is in the best interest of Axalta to do so. There can be no assurances that a definitive agreement between the parties will be reached or on what terms.”

Akzo Nobel officials say, “This will create a leading global paints & coatings company through a merger of equals.”

No details were shared on the talks, but media reports pegged the value of the merger at about $30 billion.

Unlike the unsolicited PPG bid, Akzo is apparently happy to begin discussions and acknowledge that it’s seeking a deal in public. With the PPG offer, board members refused to talk to PPG’s board and only began talks after rejected to smaller offers.

Once they agreed to talk, company officials called the meeting for the following day, limited it to 90 minutes, and refused to negotiate terms – saying they would only consider PPG’s existing offer.

The Akzo board discouraged shareholders from supporting the plan, saying it could have led to job cuts in Europe and a decline in spending on social initiatives championed by the company.

It’s not clear what makes Axalta a better option, other than Akzo officials being in the driver’s seat this time.

About the author: Robert Schoenberger is the editor of Today's Motor Vehicles and a contributor to Today's Medical Developments and Aerospace Manufacturing and Design. He has written about the automotive industry for more than 17 years at The Plain Dealer in Cleveland, Ohio; The Courier-Journal in Louisville, Kentucky; and The Clarion-Ledger in Jackson, Mississippi.