According to a Bloomberg report, Nippon Paint Holdings has made multiple offers to acquire AkzoNobel's decorative paints business, with the latest bid reaching €7.5 billion (approximately $8.55 billion). Reuters later confirmed the news, citing sources familiar with the matter.
This marks Nippon Paint's second offensive against AkzoNobel in nearly two months.
In late May, Nippon Paint joined forces with U.S.-based Sherwin-Williams to propose a joint acquisition of AkzoNobel's entire operations. The two companies hoped to complete a major consolidation in the global coatings market through the joint bid, but the proposal was quickly rejected by AkzoNobel's board.
Now, the acquisition target has been narrowed down from the entire company to AkzoNobel's most profitable decorative paints business, with continuously rising bids aimed at pushing the deal forward.
Decorative paints have long been one of AkzoNobel's most important business segments. The division covers residential, commercial construction, and renovation markets, and owns international brands including Dulux and Sikkens. It holds significant market share in Europe, Asia, and several emerging markets, and serves as a key source of cash flow and profitability for the company.
Compared to a full-company acquisition, purchasing only the decorative paints business not only makes the deal easier to finance, but also avoids the complex integration challenges associated with AkzoNobel's other industrial coatings, powder coatings, and specialty chemicals operations.
Sources familiar with the matter indicated that despite the rising offers, AkzoNobel has yet to formally respond, possibly due to its current strategic priorities.
AkzoNobel has previously announced plans to pursue a business integration with U.S.-based Axalta, aiming to improve operational efficiency, strengthen profitability, and enhance its competitiveness in the global industrial coatings market.
Selling off the decorative paints business would not only significantly alter the company's asset structure, but could also disrupt its established strategy. As a result, the board is still weighing the long-term value of different options.
Additionally, AkzoNobel has faced sustained earnings pressure in recent years.
Slowing demand in the European construction market, rising energy costs, and weak consumer spending have weighed on growth in the traditional decorative paints business. As a result, capital markets have increasingly focused on whether the company might consider divesting certain assets or optimizing its business portfolio to enhance shareholder returns.
It is precisely for this reason that Nippon Paint's successive bid increases have been viewed by many analysts as a probe—testing the board's stance while gauging major shareholders' receptiveness to a deal.
Over the past few years, the global coatings market has entered a consolidation phase.
From Sherwin-Williams' acquisition of Valspar to PPG's multiple attempts to acquire AkzoNobel, and the recent trend of major companies divesting non-core assets and optimizing business structures, competition in the industry has shifted from simply expanding production capacity to vying for high-quality assets and global distribution channels.
Nippon Paint has consistently expanded its international business through acquisitions in recent years, with overseas revenue continuing to rise. The European market has remained a significant gap in its global footprint, while AkzoNobel's decorative paints business offers exactly the kind of established brands, well-developed sales networks, and stable customer relationships it needs. If Nippon Paint succeeds in bringing this business on board, the competitive landscape of the global architectural coatings market could be fundamentally rewritten.
