JSW Paints to Snap Up AkzoNobel India Stake in $1.1 Billion Deal

Under the leadership of Sajjan Jindal, JSW Paints is on the verge of purchasing AkzoNobel India, with the Dutch parent company AkzoNobel NV's 74.76% stake valued at approximately INR 9,000 crore ($1.1 billion).

According to a media report, this places the Indian unit's overall valuation between INR 12,000 and 12,200 crore, which represents a 25% discount to its current market price.

If approved, the acquisition will greatly increase JSW Paints' market share by making it the second-largest player in the industrial paints category and the fourth-largest player in the decorative paints market in India.

AkzoNobel’s Performance at Stock Market and JSW’s Future Plans

The market value of AkzoNobel India is INR 16,380 crore, and on May 23, the company's shares closed at INR 3,582 on the BSE. Amidst mounting rumours of a share sale, the stock has increased 40% in the last year.

In accordance with regulatory requirements and the average share price over the previous 60 days, the acquisition will result in an open offer for an extra 26% of AkzoNobel India. About INR 700 crore of the company's cash is anticipated to be paid out as dividends to shareholders.

With the help of lenders including Deutsche Bank, MUFG, and Axis Bank, JSW intends to finance the takeover with INR 3,000 crore in promoter equity and an additional INR 3,000 crore in bank financing.

 The deal is anticipated to be concluded within a 30-day exclusivity window by mid-June. The transaction comes after JSW successfully bid against a group of Advent International and Indigo Paints. If finished, it might also move JSW Paints closer to reaching an annual sales target of INR 10,000 crore, paving the way for a possible initial public offering.

 With a 7% market share, AkzoNobel India provides a wide range of goods, including industrial and marine coatings as well as decorative paints.

AkzoNobel India Going Through a Tough Time

With a 7% market share, AkzoNobel India is one of the most lucrative companies in the paint industry. It produces 250 million litres a year and specialises in upscale ornamental goods.

It has, however, encountered sector-wide difficulties, such as weaker growth and declining profitability. According to industry sources quoted by a media outlet, the company surrendered its powder coatings division, which accounted for 12–14% of its income, to its parent company in February.

This move "took the shine off the deal for several potential suitors". Due to increased competition, the decorative paints category, which accounts for 75% of industry demand, is seeing a compression on margins.

According to Care Ratings, operating margins fell from 20% in H1FY25 to 16% in H1FY25 and are predicted to dip to 14% by FY26. Due in part to a special dividend given the year before, AkzoNobel India's Q3FY25 profit fell by 5%. The company's automotive and industrial paint businesses also underperformed.