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Hempel Acquires Wattyl from Sherwin-Williams

Wednesday, March 10, 2021

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In mid-February, coatings manufacturer Hempel A/S signed a purchase agreement for acquisition of Wattyl, an Australia and New Zealand-based manufacturer for in the decorative and protective segments.

While the deal—which included a divestiture from The Sherwin-Williams Company—was initially announced in February, Hempel acknowledged the acquisition just last week in its 2020 report as the first move under its new accelerated growth strategy.

About the Deal

Wattyl was founded in 1915 and employs around 750 people with an annual revenue of 150 million euros. The company has headquarters in Baulkham Hills, Sydney, New South Wales as well as two factories in Kilburn, South Australia and Footscray, Victoria.

The company also is comprised of five distribution centers and nearly 100 company-owned stores.

Hempel A/S

In mid-February, coatings manufacturer Hempel A/S signed a purchase agreement for acquisition of Wattyl, an Australia and New Zealand-based manufacturer for in the decorative and protective segments.

“We are now taking the first large, visible step in our ambition of doubling Hempel by 2025, and the acquisition will have a major, positive impact on our footprint and development in our South & East Asia region,” Hempel Group President and CEO Lars Petersson said.

“The acquisition is in line with our Double Impact strategy and the growth ambitions for our decorative and protective segments. Furthermore, the acquisition of Wattyl clearly highlights key points of the Hempel strategy: We are going for leadership positions in selected segments and geographies, and we aim to double our revenue within five years to EUR 3 billion. Doubling our revenue will allow us to double our positive impact by investing in more sustainable coating solutions, innovation and digitalization.”

Going forward, Hempel says that Wattyl will still be managed by current Managing Director Matt Crossingham. In terms of branding, the company says that it “fully recognizes the strengths and attributes of the Wattyl brand.” It intends to invest in and further develop the existing brand and use the endorsement “A part of Hempel.”

“The entire team and I are pleased to join the Hempel family, and we are looking forward to contributing to Hempel’s growth and development—not only in Australia and New Zealand—but throughout the South & East Asia region,” said Crossingham. “We will gain access to increased know-how, experience and innovation as well as a broader product portfolio, which will benefit our customers. With Hempel’s ownership, I am certain that Wattyl will raise to the next level.”

New Strategy

Hempel announced its new strategy with the goal of doubling the company’s revenue by 2025 in January. The new strategy outlines a timeline defined by focus on the entire business, leadership positions in chosen segments, industry leadership in sustainability within those, as well as a strong focus on innovation and digitalization.

“When the world closed down in 2020 and global operations including ours were challenged, we sped up our strategy process,” said Peterson at the time. “Now we have laid the foundation for not only doubling our revenue but also for significantly increasing our positive impact for our customers, partners and employees. We will build leadership positions and invest in our core segments and put sustainability at the heart of how we do business.”

According to the release, the strategy will be realized through both acquisitions and organic growth. Hempel expects 50% of revenue growth to come from M&A, however, the strategy also includes an emphasis on building market leadership positions in its Decorative, Marine, Infrastructure and Energy segments. By 2025, Hempel expects more than 50% of its revenue to come from sub segments and geographies, in contrast to its current less than 10%.

In addition, the new strategy also sets ambitious goals on sustainability such as being carbon neutral in own operations by 2025 and reducing the carbon footprint of its customers by committing to science-based targets. The sustainability framework was scheduled to launch this month.

“Putting sustainability at the heart of how we do business will drive change both within Hempel and across our value chain through our products and services,” said Peterson. “We see sustainability as a key enabler for growth, by helping our costumers reaching their sustainability targets. Our target to double in size in the next five years makes our commitment to sustainability even more important, and we are ready to make some bold decisions as we accelerate.”

Specifically, the Double Impact strategy involves:

  • Doubling revenue through both organic growth and M&A’s by 2025. Approx. 50% of growth will come from M&A with both ‘inside-the-can’ and ‘outside-the-can’ focus;
  • Focusing the business so that Hempel will secure more leadership positions in our chosen sub segments and geographies. By 2025 more than 50% of our revenue will come from the areas where we have a leadership position, compared to less than 10% today;
  • Accelerating innovation both ‘within-the-can’ and ‘outside-the-can’ and making sustainability a key driver in our innovation. Our digital solutions will cater to our customers’ needs. In our chosen segments, we will provide the best end-to-end solutions for our customers; and
  • Becoming carbon neutral in 2025 and committing to the Science Based Target initiative to ensure a rigorous, scientific and well-documented approach for reducing emissions across our value chain.

Peterson concluded: “We have been spread too thin and too shallow and therefore we focus our business by exiting some geographies by own operation and strengthening others. Alongside that we know that our customers need suppliers with end-to-end solutions and a deep knowledge and impact on the market. Based on this, we have started a transformation of how we sell and develop by building even stronger partnerships with a number of customers to truly understand their needs, future challenges and to co-create differentiated solutions.”

   

Tagged categories: Acquisitions; AS; Asia Pacific; Business matters; EMEA (Europe, Middle East and Africa); EU; Good Technical Practice; Hempel; Mergers; Sherwin-Williams; Wattyl Limited

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