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AkzoNobel Dims Decorative in Germany

Monday, July 1, 2013

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AkzoNobel's Decorative Paints business continues its crash diet, with a newly announced plan to shed its German paint stores immediately after selling off its North American unit.

The German shift, announced Wednesday (June 26), follows the company's $1.05 billion sale of its North American decorative paints business to PPG Industries. That deal, which involved about 600 stores, was announced in December and closed in the spring.

Sikkens Experience
Photos: AkzoNobel

AkzoNobel said it would focus on Sikkens and other brands. The "Sikkens Experience" brings the brand to end users.

AkzoNobel said the new sale would allow the company to "sharpen [its] distribution focus" in Germany.

With the divestment of the Decorative Paints stores, that focus will shift toward the company's range of industrial coatings, which are produced at several sites across Germany.

Scope of the Deal

AkzoNobel currently operates 72 German stores selling professional paint and third-party products, with the Decorative Paints organization employing about 950 people in Germany.

In total, AkzoNobel's Decorative Paints, Performance Coatings and Specialty Chemicals businesses have 3,900 employees in Germany, along with 17 manufacturing plants and eight offices, generating revenue of close to €1.3 billion (about $1.6 billion USD) in the country in 2012.

AkzoNobel said the new deal "is intended to strengthen the performance of the company’s German Decorative Paints business by focusing its activities on the distribution and marketing of paint under brands such as Sikkens, Herbol and Consolan."

Changing Distribution

The new set-up "will allow AkzoNobel to select the most efficient distribution channels for its professional paint products, rather than operating its own stores," the company said.

AkzoNobel will "enter into strategic partnership agreements with the future shop owners, as well as strengthening its relationship with its existing network of independent distributors."

AkzoNobel - CoilCoatingsNuremberg

AkzoNobel continues to make coil coatings in Nuremburg.

Ruud Joosten, the company's Executive Committee member responsible for Decorative Paints, said, "We are changing the marketing strategy of our German Decorative Paints business to focus on our key organizational strengths of marketing and distributing our strong paint brands.

"This is part of our ongoing efforts to strengthen both our organizational efficiency and our profitability in Germany."

'Important Market'

Werner Fuhrmann, the Executive Committee member responsible for Specialty Chemicals and Germany, said that the country "has always been, and will remain, an important market for AkzoNobel."

Fuhrmann sought to dispel any impression that AkzoNobel was weakening its presence in the country.

"The company is continuing to invest in Germany, evidenced by recent acquisitions including Schramm (2011), Lindgens Metal Decorating Coatings (2010), Dow Chemicals' Rohm & Haas business (2010) and LII Europe (2009)," he said.

"A total of €140 million [$181.9 million USD] is also being invested in new technology at a chemicals plant in Frankfurt, which is expected to go on stream in the first quarter of 2014."

AkzoNobel Frankfurt industrial plant

The company produces industrial coatings in Frankfurt. AkzoNobel said it was committed to Germany, which it called an important market.

At the same time, however, the Dutch coating giant said it would be "reviewing its office footprint in Germany."

Said Fuhrmann: "These improvements are intended to reduce complexity and further improve the operational efficiency of our German activities. They will boost our competitiveness and help us to greater success for our businesses in Germany going forward."

   

Tagged categories: AkzoNobel; Architectural coatings; Business conditions; Decorative coatings; Market; Mergers; Paint and Coating Sales; PPG

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