Dulux paint production at Akzo Nobel NV’s paint factory in Ashington, U.K.
© 2017 Bloomberg Finance LP
Akzo Nobel said its board has rejected the €7.5 billion ($8.5 billion) takeover bid by Nippon Paint Holdings—controlled by the family of late Singaporean billionaire Goh Cheng Liang—for the company’s decorative paints unit as it continues to back the proposed merger with Axalta Coating Systems.
Amsterdam-based Akzo Nobel, best known for its Dulux paint brand, said the proposal from Tokyo-listed Nippon Paint significantly undervalues Akzo Nobel’s decorative paints business, the Dutch paints giant said in a statement on Monday.
“The board continues to unanimously recommend the merger of equals between AkzoNobel and Axalta, taking into account the compelling strategic rationale and benefits,” the company said in the statement.
The Nippon offer comes just a month after the Japanese company and Sherwin-Williams Co. ended a joint bid to buy all of Akzo Nobel after the Dutch paint maker said the joint bid would have difficulty getting regulatory approval.
In November, Akzo Nobel agreed to merge with Philadelphia-based Axalta Coating Systems, creating a company with combined annual revenue of about $17 billion and an enterprise value of roughly $25 million. Under the agreement, Akzo Nobel shareholders will own 55% of the new company, while Axalta shareholders will hold the remaining 45%. The combined company, which is expected to generate annual cost savings of $600 million, will be listed on the New York Stock Exchange.
With a net worth of over $13 billion, the Goh family draws the bulk of their wealth from a majority stake in Nippon Paint, the world’s fourth-largest paint manufacturer by revenue.