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The race for Akzo Nobel India Ltd has narrowed to Pidilite Industries Ltd, JSW Paints Pvt. Ltd and Indigo Paints Ltd, two people close to the development said, with a deal likely to value the maker of Dulux paints at $2.1-2.
5 billion. Earlier, one of the persons said, Aditya Birla Group flagship Grasim Industries Ltd and Adani Group were approached for the deal, since some of their subsidiaries are engaged in construction and real estate that requires paints and coatings. But the talks remained inconclusive.
Akzo Nobel NV, Europe's largest paint maker, has hired Citigroup to sell its 74.6% stake in the Indian unit. Also read | "The discussions with the two groups (Aditya Birla group and Adani Group) remained inconclusive.
Now, the names at the top of the list of bidders have changed, with valuations being negotiated at $2.1-2.5 billion," one of the two people cited above said on the condition of anonymity.
In talks with PE investors A third person said that both Indigo and JSW are in talks with PE investors including Warburg Pincus, TPG, Carlyle and CVC to make a bid. A TPG spokesperson declined to comment. Queries emailed to Akzo Nobel, Citigroup, Pidilite, JSW Paints and Indigo Paints, as well as the other PE firms remained unanswered.
"There is considerable interest in the decorative business of Akzo Nobel. A large part -- almost two-third of the current value—comes from the decorative business," the second person added. If a deal is struck at a valuation of $2-2.
5 billion, it would mark the country's largest takeover in India's paints industry led by Asian Paints, Berger Paints, Akzo Nobel and Kansai Nerolac. Akzo Nobel, which sells Dulux, International, Sikkens and Interpon brands in India, holds a market share of 5-6%, while market leader Asian Paints commands about 50% Also read | According to one of the persons, Pidilite Industries has offered a share swap, while others are ready to make an all-cash deal. In either case, any takeover will involve an open offer, since there will be a change in the promoter group.
On Tuesday, shares of Akzo Nobel closed 1.4% lower at 3480.5 on the BSE, while the benchmark Sensex index closed 1.
3% lower. Akzo Nobel NV held a strategic review of its South Asia businesses earlier this year. The initial plan was to partner with a larger paintmaker in India, in the face of rising competition.
On 30 October, first reported that the Dutch firm has hired Citigroup as its investment banker for the sale, and has approached JSW Group, Adani Group, Aditya Birla Group, and Asian Paints. To Pidilite's benefit Out of the three finalists, Pidilite, widely known for Fevicol adhesives, entered the paints business in 2023. If a deal goes through, the company is expected to benefit given its distribution strength and familiarity with the paints space having been in the business of related goods such as adhesives and water-proofing products.
Meanwhile, JSW Paints currently has two manufacturing units—an industrial coatings facility at Vasind in Maharashtra and a decorative paints facility at Vijayanagar in Karnataka—with a combined capacity of 170,000 kl per annum. Indigo Paints, on the other hand, operates manufacturing units with a total capacity of about 160,000 klpa for liquid paints and around 138,000 mtpa for putty and cement paint. Also read | Asian Paints is planning significant capex over the next three fiscal years, including greenfield and brownfield expansion across multiple facilities, according to a September report by Crisil Ltd.
The entire capex will be funded through annual cash accrual of 3,500-4,000 crore. A September report by Care Ratings said Berger Paints is setting up a greenfield project at Panagarh in West Bengal at a cost of 500 crore, after which it would set up a unit in Odisha, with proposed capex of about 1,460 crore and annual capacity of 410,000 kl. The company recently commissioned a 1,097 crore facility at Sandila in Uttar Pradesh.
Kansai Nerolac has planned capex of at least 316 crore to add capacity of 1,54,080 kl over FY24-25E, according to an ICICI Direct report. AkzoNobel has a capacity of over 250 million litres per annum. Also read | On 22 November, AkzoNobel India said its board has approved a proposal to sell non-productive properties of the company.
Earlier in October, Asian Paints' CEO Amit Single said his company is open to acquisition opportunities that may come up as the industry undergoes consolidation..
