AkzoNobel to Shed German Paint Stores
AkzoNobel continues to shrink its global decorative paints business, announcing that it will divest its decorative paints stores for professionals in Germany to independent wholesale distributors.
The move, announced Wednesday (June 26), comes on the heels of the $1.05 billion sale of AkzoNobel's North American decorative paints business to PPG Industries. That deal, which involved about 600 stores, closed in April.
AkzoNobel said the new sale would allow the company to "sharpen [its] distribution focus" in 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."
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 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."
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."
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 Netherlands-based company 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."