JSW Paints has sealed the deal to acquire a 75% stake in AkzoNobel India, the country’s fourth-largest paints maker, for Rs 12,000 crore ($1.4 billion), informed sources have told FE. An official announcement is likely to be made as early as next week, with JSW Paints, an unlisted company, looking at a mix of internal accruals, debt and equity to fund the acquisition, persons in the know said.
AkzoNobel NV, the Dutch parent of AkzoNobel India, had put its 75% shareholding in the firm on the block, following a strategic review that began in October last year. Both AkzoNobel India and JSW Paints declined comment when contacted.
However, in an exchange filing on Friday, AkzoNobel India said that it had not received any information from its parent firm about the portfolio review by it. Shares of AkzoNobel India closed at Rs 3,596.95, up 3.35% versus previous day’s close, on the BSE. Based on Friday’s close, the firm’s market capitalisation stood at Rs 16,380.62 crore. “We do not have any information or announcement, which, in our opinion could explain such movement in trading in the scrip of the company,” the firm said in its exchange filing.
Its parent, AkzoNobel NV, is said to have made up its mind after months of review, which saw multiple players in the fray. In the end, only two bidders were left in the race — JSW Paints and Indigo-Advent — sources said. Valuations, which were initially pitched at Rs 20,000-24,000 crore, have been halved in a rapidly evolving paints market, sources added.
The Jindal family may bring in Rs 2,000-3,000 crore to fund the deal after a proposed stake sale of 2% in JSW Infrastructure, sources said. The deal is expected to trigger the mandatory open offer for the remaining portion (25%) of the company. JSW Paints may use the reverse merger route to acquire AkzoNobel India, the maker of Dulux brand. JSW Paints may also acquire the Sri Lankan operations of AkzoNobel in the future. The Dutch major operates its Sri Lankan unit via a joint venture with a local partner, sources said.
The AkzoNobel deal will catapult JSW Paints to the fourth position after Asian Paints, Berger and Kansai Nerolac, making it a formidable player in the domestic paints market valued at around Rs 65,000 crore. Paints will also become the third pillar for the JSW Group after steel and cement, helping it to leverage dealer and distribution synergies and push a suite of products from paints to steel and cement, something that rival Aditya Birla Group is also doing.