JSW Paints Limited is competing with a consortium of Advent International, L.P. and Indigo Paints Limited (NSEI: INDIGOPNTS) to acquire Akzo Nobel India Limited (BSE:500710), the owner of Dulux Paints, from its Dutch parent Akzo Nobel NV (ENXTAM:AKZA), which is looking to exit India as part of a global restructuring, multiple people aware of the developments told ET. Both contenders submitted binding bids this week after the first deadline of April 15 was extended. The third contender, Pidilite Industries, which chiefly wants only Akzo?s decorative business, is also believed to be in the fray, but has not made an aggressive bid.
Akzo Nobel NV, Europe?s largest paints company, holds a 74.76% stake in Akzo Nobel India. Since last October, the Amsterdam-based major has been working with its advisor to monetise its business as the $9 billion paints market in India has lately been witnessing unprecedented competition. The arrival of Aditya Birla Group, which owns the Birla Opus brand, has disrupted the established pricing norms in the paints industry, denting incumbents.
Akzo plans a series of board meetings starting this week to evaluate the bids and take a final decision, said the people mentioned above. However, the bids are all at a 10% -15% discount to the current market price. The market value of Akzo India was INR 15,565.68 crore at Wednesday?s closing price of INR 3,418 per share.
In February, Akzo India hived off and agreed to sell its powder coatings business its most profitable stream that contributes close to 12%-14% of sales to its Dutch parents . This has impacted the valuations of the residual business, which includes decorative and industrial paints. Moreover, the Akzo stock has risen 40.22% with the scrip touching its 52-week high of INR 4,649 per share in October in anticipation of the sale.
That?s in contrast with the fortunes of its peers in India, like Shalimar or Indigo, which have seen one year returns crater 20-35%.
