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October 30, 2017

Philly-based Axalta in talks with Dutch competitor for $30 billion merger

Business Mergers
103017_AxaltaGIC Source/Navy Yard

Rendering of Axalta's Global Innovation Center, currently under construction at Philadelphia's Navy Yard.

Philadelphia-based Axalta, the world's biggest producer of car coatings, confirmed Monday that it is engaged in talks with Dutch chemicals and paints maker AkzoNobel to form a roughly $30 billion company.

The discussions come after AkzoNobel, a global leader with a market value of about $22 billion, repeatedly rejected takeover offers from American competitor PPG Industries, sparking a legal dispute brought on by U.S. hedge fund Elliot Management.

Headquartered in Center City, Axalta employs more than 13,000 people and specializes in coatings for light vehicles, commercial vehicles, electric motors and other industrial applications. The company, a former unit of DuPont, has posted two consecutive quarters of profit declines as the cost of paint ingredients rises, Bloomberg reported Monday.

“Axalta today confirmed that it is engaged in discussions with AkzoNobel regarding a potential merger of equals transaction between Axalta and Akzo’s Paints & Coatings business," the company said in a statement. "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.”

With a market value of about $8.1 billion, the "merger of equals" language reportedly reflects AkzoNobel's separate plans to spin off its $5.6 billion specialty chemicals business, according to The New York Times. That reconfiguration would bring the companies closer in size.

An ING analyst told Bloomberg that Axalta represents the "ideal poison pill" for AkzoNobel to gain an edge over PPG.

If a deal does go forward and can withstand antitrust scrutiny, the merger would bring together the world's third- and fourth-ranked coatings manufacturers.