Dulux owner AkzoNobel seeks sale of India unit amid growing competition

AkzoNobel NV, Europe’s largest paint maker and owner of Dulux, plans to exit its India business after 70 years, a move that comes amid increasing competition in the domestic market. The Dutch firm is seeking an all-cash deal valuing its Indian arm at $2.5-3 billion, Mint reported on Thursday.

 

JSW Group, Adani Group, Aditya Birla Group, and Asian Paints Ltd have been approached as potential buyers for the deal. Headquartered in Amsterdam, AkzoNobel, has been operating in India under various names since 1954.

 

The news report states that while the promoters are aiming for a premium of about 50 per cent over the current market value, potential buyers are offering a premium of 25-40 per cent. With a market capitalisation of $2.1 billion, AkzoNobel is open to either remaining as a minority partner or fully exiting, according to CEO Gregoire Poux-Guillaume last week.

 

Evolution of AkzoNobel in India

Brunner Mond & Co, part of the ICI group in the United Kingdom, rebranded as Imperial Chemical Industries (India) Ltd in 1929. The company diversified and established Indian Explosives Ltd in 1954, a joint venture between ICI Plc and the Indian government. In 1985, it was renamed IEL Ltd, and in 1989, it became ICI India. After the government divested its stake completely in 2003, the company was renamed Akzo Nobel India in 2010.

 

AkzoNobel operates in India with a production capacity exceeding 250 million litres per annum and has a 16 per cent share in the premium paints market.

 

Factors like increasing urbanisation and the government’s focus on infrastructure are expected to drive growth in the paint sector.  “Today, the urbanisation level is about 35 per cent in India. Consumption (of paint) is going to increase until urbanisation increases to 50-55 per cent…,” Berger Paints MD and CEO, Abhijit Roy, said in August during the company’s annual meeting.