Nippon Paint acquires specialty chemicals manufacturer AOC for $2.3 billion

Lone Star Funds has reached an agreement to sell specialty chemicals manufacturer AOC to Japan's Nippon Paint Co., Ltd. for $2.3 billion.

Nippon Paint Group said on the 28th that it expects to complete the acquisition of Tennessee-based AOC in the first half of 2025. AOC mainly operates in the United States and Europe, engaged in the development, manufacture and distribution of formulations such as unsaturated polyesters and vinyl esters.

Osaka-based Nippon Paint said it plans to fund the acquisition through debt financing and does not intend to conduct equity financing. The company said it expects the acquisition to increase earnings per share in its first year and promote the growth of its existing business through cooperation.

Nippon Paint said that with a wide customer base (including regions with great growth potential), advanced technical capabilities (high levels of product customization based on customer needs) and a flexible logistics network, AOC has a leading position in the US and European markets as a professional formulation provider of CASE, colorants and composite solutions. In addition, the company also has excellent cash generation due to excellent profitability and low capital expenditure requirements.

As for AOC India Pvt Ltd, a subsidiary of AOC Group, all shares will be temporarily transferred outside AOC Group before the closing date of the acquisition due to the time required to obtain the necessary approvals from Indian regulators. However, once the necessary approvals are obtained, AOC Group intends to quickly recover all shares of AOC India Pvt Ltd.