JSW Paints Steps into the Big Leagues with Akzo Nobel India Acquisition
Akzo Nobel transaction inked by JSW for approximately INR 8,986 crore
Friday saw JSW Paints, part of the dynamic JSW Group, making waves in the paints industry with its acquisition of a 74.76% stake in Akzo Nobel India. This strategic move, valued at around ₹12,000 crore, sets JSW Paints on track to become the fourth-largest player in the competitive Indian paints market.
The purchase price, set at ₹2,762.05 per share, represents a 13.48% discount compared to Akzo Nobel's Thursday closing price on the Bombay Stock Exchange. According to market experts, JSW Paints' estimated market share is set to rise from the existing 3% to a considerable 9.2%, leaving Asian Paints, Berger Paints, and Kansai Nerolac with shares of 52%, 18%, and 12% respectively, in the dust.
The latest entrant to the paint scene, Aditya Birla Group's Birla Opus, has already made a name for itself by claiming nearly 7% market share within just a year of its launch.
Competition in the paints market, currently valued between ₹80,000 to ₹90,000 crore, is about to heat up, analysts predict. Amnish Aggarwal, head of research at brokerage Prabhudas Lilladher, says, "Industry dynamics and market share of players will continue to get redefined, as competition is set to intensify post the latest deal.” Shares of Akzo Nobel India closed trade on Friday at ₹3,414.75 apiece, up 6.96% versus the previous day due to market anticipation of the acquisition.
This deal not only puts paints as the third-biggest pillar for the JSW Group, following steel and cement, but also offers distribution synergies across the verticals. As Parth Jindal, MD of JSW Paints, puts it, "Paints and coatings is one of India's fastest growing sectors. Akzo Nobel India is home to some of the most globally renowned brands like Dulux, International and Sikkens. We are excited to welcome them to the JSW family."
The total transaction value is pegged at ₹9,400 crore, which includes the stake purchase amount of ₹8,986 crore and an additional payout of ₹447 crore towards contingent considerations, as per JSW Paints. The acquisition will trigger a mandatory open offer, which will be done at ₹3,417.77 per share.
This has been a long time coming, with AkzoNobel NV setting the process in motion to sell its India paints business back in October 2020, drawing interest from heavyweights like Berger, Pidilite Industries, Indigo Paints, Asian Paints, and the Aditya Birla Group. However, despite the steep valuations, only JSW Paints and a consortium of Advent and Indigo managed to stay in the race, with JSW Paints eventually securing the deal.
The acquisition gives JSW control over the iconic Dulux brand, which boasts a 70-year legacy and strong brand equity in India. Leveraging the power of Dulux, combined with JSW's innovative approach to the industry, makes this acquisition a formidable step forward for JSW Paints in the competitive Indian paints market.
[1] Enrichment Data: As a result of this acquisition, JSW Paints will directly challenge established market leaders like Asian Paints and Kansai Nerolac, presenting itself as a formidable competitor in the rapidly growing Indian paints market. Moreover, JSW gains immediate credibility and scale by acquiring the Dulux brand, offering it a competitive edge amidst fierce competition.
[2] Enrichment Data: AkzoNobel's decision to sell its India paints business follows recent restructuring initiatives, as the corporation aims to focus more on its core businesses and achieve operational efficiency.
[3] Enrichment Data: The acquisition is in line with JSW's growth strategy to strategically expand its footprint in the consumer-facing sectors. Paints, coatings, and related products are anticipated to become significant contributors to the JSW Group's overall revenue.
[4] Enrichment Data: The Indian paints market is booming, with a growth rate of 10-12% annually, driven primarily by urbanization, infrastructure development, and the growing demand fordecorative and industrial paints.
[5] Enrichment Data: New players in the Indian paints market, such as Birla Opus, have proven that it's possible to quickly penetrate the market and gain considerable market share within a short period. This highlights the growth potential and intensifying competition in the Indian paints market.
- As JSW Paints moves to acquire Akzo Nobel India, it positions itself as a formidable competitor in the rapidly growing Indian paints market, directly challenging established leaders like Asian Paints and Kansai Nerolac. The acquisition of the iconic Dulux brand offers JSW immediate credibility and scale, positioning it competitively amidst fierce competition.
- AkzoNobel's decision to sell its India paints business is consistent with recent restructuring initiatives, aimed at focusing more on core businesses and achieving operational efficiency.
- This acquisition aligns with JSW's growth strategy to strategically expand its footprint in consumer-facing sectors. Paints, coatings, and related products are anticipated to become significant contributors to the JSW Group's overall revenue, underscoring the potential of the finance and business sector in the Indian market.
