Dulux paintmaker AkzoNobel brushes up India portfolio with ₹2,144 crore buyout

The deal includes two key components: a ₹2,073 crore slump sale of the powder coatings business and a ₹70 crore transfer of the international research centre, both to be executed through separate business transfer agreements with an indirect wholly owned subsidiary of AkzoNobel N.V., proposed to be incorporated in India.

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In addition, AkzoNobel India will acquire intellectual property rights from AkzoNobel Coatings International B.V. for its decorative paints business in India, Bangladesh, Bhutan, and Nepal for ₹1,152 crore. This IP transfer will make the Indian arm fully independent in terms of brand and technology for its core decorative paints segment.

“These transactions will make AkzoNobel India a more focused liquid paints and coatings business and enable it to become a fully brand-and-technology-independent company for its core decorative paints business,” said the company statement.

Strategic shift

The move comes as part of AkzoNobel’s strategic review of its India business, initiated last year. 

On February 18, Mint reported that AkzoNobel N.V. is likely to revise its India business sell-off plan, opting to sell only its consumer-facing paints division for $1.5-1.7 billion while retaining the technically complex industrial coatings segment. 

The coatings business, safeguarded by intellectual property rights and long-term agreements spanning 10 to 20 years, is harder to divest. Meanwhile, Pidilite Industries Ltd., JSW Paints, and Indigo Paints Ltd. have advanced to the second round of bidding to acquire the Dulux paints business.

It is tricky to sell the B2B coatings segment, given its dependence on chemical technology and expertise, said a source cited by Mint, speaking on condition of anonymity.

Industrial coatings

Globally, AkzoNobel is one of the largest players in industrial coatings. In India, the company holds multiple contracts, including some with the Indian Navy, such as the recent painting of the INS Vikrant.

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In the industrial coatings space, AkzoNobel competes with other major players like Asian Paints Ltd., 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.

The completion of these transactions is subject to shareholder approval at AkzoNobel India and the supervisory board of AkzoNobel N.V.