JSW Paints buys AkzoNobel’s Indian company, know the details
A big deal has emerged in the Indian paint industry. JSW Paints has signed an agreement to buy AkzoNobel India’s business for around ₹12,000 crore (about $1.1 billion). After this, JSW will now become India’s fourth largest paint company.
According to experts, after months of negotiations, JSW decided to buy 75% stake in Akzo Nobel for ₹9,000 crores, which is 17.4% cheaper than Thursday’s market price. After this deal, Akzo Nobel’s shares have jumped by more than 7 % today.
Why is this deal special?
According to media reports, JSW beat big bids like Indigo Paints-Advent Consortium and Pidilite Industries. With this acquisition, JSW will become the second largest in the industrial paints segment after Kansai Nerolac.
There will be an open offer for 26% stake to Akzo Nobel shareholders, the price of which will be determined based on SEBI’s formula (Thursday’s closing price ₹3,213/share). Dutch company Akzo Nobel may still retain a minority stake.
The journey of Akzo Nobel
Akzo Nobel, which has been active in India for 70 years with the ‘Dulux’ brand, has been in a shaky condition for some time. The shares were at a record level of ₹ 4,649 in October 2023, but now they have fallen by 30% to ₹ 3,213. The company’s market cap is ₹ 14,524 crore,Which has declined by 10.5% this year. Due to sluggish demand and increased competition in the industry, it has only 7% market share. In February, it sold its most profitable powder coatings business to its Dutch parent company.
Why is this step necessary for JSW?
JSW Paints, launched in 2019, has not been able to gain a strong foothold in the market so far. After five years, it made operating profit (on ₹2,000 crore revenue) for the first time in 2023-24. Akzo’s manufacturing units, distribution network and ‘Dulux’ brand will increase its reach.
After this deal, JSW Paints’ revenue will immediately exceed ₹3,000 crore.
Indian paint industry
Conglomerates are now increasingly making inroads in the ₹80,000-90,000 crore Indian paint market. The Adani Group recently entered the paint market through Ambuja Cement. Birla Opus has achieved high single-digit market share in just one year and is targeting a ₹10,000 crore turnover in 3 years.According to experts, the industry will grow at a rate of 10-12% annually over the next few years due to housing incentives and rising purchasing power.
Jay Chavda He is the Founder and Writer of businesspulsecare.com. He is an I.T Engineer, Freelancer, Businessman. He posts Business, Stock/Share Market, Finance Related News and updates on the website. 🔗