AkzoNobel N.V., the Dutch parent company of Dulux-branded paint maker AkzoNobel India, has carved out and acquired the powder coatings business and International Research Centre (R&D) of its Indian arm. The move comes a year after the company launched a strategic review of its business and subsequently initiated the process to sell its consumer-facing division.
According to AkzoNobel India’s exchange filing, AkzoNobel N.V. will acquire the powder coatings business and international research centre of AkzoNobel India for Rs 2,144 crore, making it an indirect wholly owned subsidiary.
Under the deal, AkzoNobel N.V. will transfer intellectual property rights for its decorative paints business in India, Bangladesh, Bhutan, and Nepal to AkzoNobel India for Rs 1,152 crore. These transactions are subject to shareholder approval and clearance from AkzoNobel N.V.'s supervisory board.
Following these transactions, AkzoNobel India will focus on its liquid paints and coatings business, becoming a fully brand-and-technology-independent company for its core decorative paints segment, the exchange filing said.
AkzoNobel India’s shares were trading 1.33% higher at Rs 3,310.90 at 11:10 AM.
Strategic Split Before Divestment
The move by the Dulux paint maker comes amid the sale of its decorative paints business, which has reportedly received bids from Pidilite Industries Ltd., JSW Paints, and Indigo Paints Ltd. The deal could be worth as much as $1.5 billion, according to Mint.
However, to facilitate the sale, AkzoNobel India reportedly needed to separate its powder coatings business, which serves industrial clients, from its liquid paints business, which primarily caters to households. Industrial coatings businesses often have long-term contracts, making them harder to divest. One of AkzoNobel India’s clients includes the Indian Navy.
AkzoNobel India faces competition from key players such as Asian Paints, which has a joint venture with US-based PPG Inc.; Kansai Nerolac, which partners with ICRO Coatings and Polygel Industries; and Nippon Paints, which collaborates with Italy’s IVM Chemicals in the industrial coatings sector.
