The acquisition marks JSW Paints’ largest deal to date and positions it as the fourth-largest player in India’s competitive paints market. It also ends months of negotiations that began earlier this year. The deal comes at a 17.4% discount to Akzo Nobel India’s Thursday closing price.
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ET had first reported in its May 26 edition that JSW had entered exclusive negotiations for the deal.
Neither JSW Paints nor Akzo Nobel were immediately available for comment.
The company helmed by Parth Jindal – has trumped bids from a consortium of Indigo Paints and Advent International, and adhesive manufacturer Pidilite Industries, as it sought to fortify its presence in the industrial paints segment, where it will now be the second-largest after Kansai Nerolac India.Announcement of the acquisition will trigger an open offer for a 26% stake to be purchased from minority shareholders of the company. Depending on the success of the open offer – price will be in accordance to the Sebi formula based on the Thursday closing price – JSW will buy proportionate shares from Akzo. It will not cross the 75% threshold, which means the Dutch company can potentially retain a small stake.Also Read: HDB Financial Services IPO: Should you subscribe? Here’s what brokerages say
On Thursday, Akzo Nobel shares closed at Rs Rs 3,213/share on BSE. Its current market capitalisation is Rs 14,632 crore, down 10.5% year to date.After hitting a lifetime high of Rs 4,649/share in October last year, its shares have since seen correction, and are down nearly a third from their peak.
Akzo Nobel India, which sells under the ‘Dulux’ brand in India, has completed seven decades of operations in the country, and currently has a market capitalisation of Rs 14,524 crore.
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Subdued demand conditions for the industry also weighed on the company’s share prices as the sector saw annual demand fall for the first time in nearly three years amid higher competitive intensity. Akzo Nobel India has about a 7% market share in India currently.
While JSW Paints, launched in 2019, was among the earliest conglomerates to foray in the paints sector, the company has not been able to garner substantial market share over the years. Five years after its launch, the company posted its first operating profit in fiscal 2024, on a revenue of Rs 2,000 crore.
AkzoNobel had announced plans to review its business operations in the Indian subcontinent in October 2024. In February, Akzo Nobel India hived off and agreed to sell its powder coatings business—its most profitable stream that contributes 12-14% of sales–to its Dutch parents. That took the shine off the deal for several potential suitors.
The Aditya Birla Group’s ‘Birla Opus’ meanwhile, commands a high single-digit market share in about a year since launching its operations in 2024. It is targeting a turnover of Rs 10,000 crore in three years of its operations.
Currently pegged at around Rs 80,000 – Rs 90,000 crore, the Indian paint industry is expected to clock in a 10-12% growth in volumes over the next few years, led by an impetus on housing and higher discretionary incomes.
As compared to paint companies which were stepping into the Indian market a few years back, the recent years have seen conglomerates enter the space.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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