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AkzoNobel Completes Acquisition of Titan

Tuesday, March 9, 2021

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Global coatings company AkzoNobel announced last week that it has completed the acquisition of 100% of the shares of Industrias Titan S.A.U., a decorative paints business based in Spain.

The financial terms of the deal were not disclosed, although, according to AkzoNobel, Titan generated an annual revenue of around 80 million euros. Titan Paints was founded in 1917 and is reportedly one of Spain’s best-known brands. There is also a relevant presence in Portugal.

The transaction includes three production facilities (in Barcelona and Las Palmas, Spain, and Maia, Portugal) and seven logistics and service centers for decorative paints, including “one of the modern manufacturing plants for water-based paints in Europe,” according to the company.

The business, which has 425 employees, reportedly shares AkzoNobel’s commitment to sustainable product innovation.

AkzoNobel

Global coatings company AkzoNobel announced last week that it has completed the acquisition of 100% of the shares of Industrias Titan S.A.U., a decorative paints business based in Spain.

AkzoNobel announced the transaction in October and at the time said that the move aims to further grow in Europe with Titan’s shared commitment to sustainable product innovation.

“The Spanish market has strong growth potential, and this is an excellent opportunity for us to reinforce our position in the region,” says AkzoNobel CEO Thierry Vanlancker. “The acquisition will enable us to better serve our customers and provides added momentum, while also offering further proof of us being the reference in paints and coatings in Europe.

“The fact that a significant part of Titan’s portfolio has been awarded the European Ecological label also offers exciting possibilities for combining our technologies and expertise, which will result in us developing better and more sustainable products.”

Alberto and Joaquin Folch-Rusiñol, Industrias Titan S.A.U administrators, also commented on the deal, saying: “We’re delighted to hand over Titan's decorative paints business to a global leader like AkzoNobel. We’re confident they will care for Titan's legacy in the same way the family has done for over 100 years.”

Recent AkzoNobel Acquisitions

At the end of last year, AkzoNobel announced that it was set to increase its presence in the North American yacht coatings market with its acquisition of New Nautical Coatings.

Established in 1978, the company is the owner of the premium Sea Hawk brand and supplies premium antifouling coatings, as well as several other products, such as primers and varnishes.

Although the privately-owned company operates out of a facility in Clearwater Beach, Florida, New Nautical Coatings is reported to be one of the top players in yacht coatings in North America, generating sales in the Caribbean and Australasia areas as well.

The company reports that the Sea Hawk brand has a high customer loyalty among yacht owners, shipyards and maintenance service providers due to its premium quality and product performance.

More recently, AkzoNobel was in a back-and-forth with Pittsburgh-based PPG for Finnish decorative coatings company Tikkurila.

AkzoNobel’s offer was originally publicized on Jan. 18 and includes an all-cash public offer for all issued and outstanding shares of Tikkurila at an offer price of 31.25 euros per share. At the time, Tikkurila had already entered into an agreement with PPG.

Tikkurila was established in 1862 and is headquartered in Vantaa, Finland. The decorative paint company has operations in 11 countries, with 80% of its revenue coming from Finland, Sweden, Russia, Poland and the Baltic states.

Tikkurila’s industrial paint business includes wood and protective coatings end-use segments, among others. The company employs approximately 2,700 people and reported sales of approximately 564 million euros in 2019.

PPG initially announced the agreement with Tikkurila in December, at the time offering 1.1 billion euros ($1.35 billion). Then, on Jan. 5, PPG upped its offer to the $1.5 billion, after Tikkurila revealed that it had received a competing offer from Hempel.

A little more than a week later, AkzoNobel unveiled its own bid of the $1.7 billion and am invitation to Tikkurila’s Board of Directors to enter negotiations. The company also made it a point to echo Hempel’s key terms for the sale of assets, including the decorative paints business of AkzoNobel in the Nordics and the Baltics, to be completed after closing.

Tikkurila responded with a statement that it would take AkzoNobel’s offer into consideration, while PPG would also get an opportunity to again raise its bid. PPG did not publicly comment on AkzoNobel’s bid announcements.

Then, at the end of January, AkzoNobel made its official binding proposal to Tikkurila’s Board, representing a total equity value of about 1.4 billion euros ($1.7 billion), a counter offer to PPG’s 1.24 billion euros ($1.5 billion).

The “bidding war” ended in early February, when PPG upped its bid again, prompting AkzoNobel to withdrawal from the process.

On Feb. 4, both PPG and Tikkurila announced that they had come to an amended agreement that came with a total transaction value of approximately 1.52 billion euros (about $1.83 billion). In this offer, Tikkurila shareholders would receive 34 euros for each share. Based on this offer, certain majority shareholders of Tikkurila (about 29.34%) have unconditionally agreed to sell their shares to the Pittsburgh-based company.

In its announcement, PPG listed several other terms and conditions of its proposal, and directly compared them to AkzoNobel’s, including:

  • A premium of 8.8% compared to the competing offer from AkzoNobel, maximizing value for all of Tikkurila’s shareholders;
  • Expected closing as early as March or early in the second quarter of 2021;
  • Regulatory process progressing in line with expected closing date, which represents a significantly quicker timeline than the transaction proposed by AkzoNobel and enabling closing ahead of Tikkurila’s annual peak season in the second and third quarters;
  • Enhanced deal certainty by lowering the tender acceptance threshold from 90% to 66.7% and providing certain additional regulatory undertakings; and
  • A far more certain and attractive future for Tikkurila’s business, employees, and stakeholders by preserving the company in its entirety, without the disruption and dislocation of divestitures possibly including certain Tikkurila businesses, regulatory uncertainty and the extended timeline required by AkzoNobel’s proposal.

About four days after this, AkzoNobel announced officially that it no longer intended to pursue Tikkurila, adding: “Despite a strong cultural fit—and more synergies than any other combination with Tikkurila—the intended transaction no longer meets AkzoNobel’s criteria for superior value creation.”

   

Tagged categories: Acquisitions; AkzoNobel; Business matters; Decorative painting; EMEA (Europe, Middle East and Africa); EU; Good Technical Practice; Latin America; Mergers

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