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6. Dec 2018 | Raw materials

Akzo Nobel and PPG Industries strengthen their businesses with minor acquisitions

Akzo Nobel pursues its course on being a focused paint company and boosts its position in the decorative paints market. PPG strengthens its footprint in Europe and the United States.

Akzo Nobel and PPG Industries strengthen their businesses with smaller acquisitions. Image source: carballo - stock.adobe.com

In the last couple of years, both companies showed a neck to neck race for the top spot as the largest paint and coatings producer worldwide. After Sherwin-Williams swung to the top by acquiring rival Valspar, PPG and Akzo Nobel are now second and third in this ranking. With revenues of EUR 12.9 billion, PPG is trailing Sherwin-Williams (EUR 13.2 billion) closely. By divesting its specialty chemicals business and becoming a focused paint and coatings company, Akzo Nobel divested nearly a third of its annual sales and records now sales in the single digit billion range (EUR 9.6 billion).

Akzo Nobel‘s moves

Akzo Nobel bought Xylazel, a 100 % subsidiary of Pharma Mar. That acquisition served to strengthen the coatings producer‘s business and to become a leader in the decorative paints market in Spain. It also means the company is now the leader in the country‘s woodcare segment and has strengthened its position in metal care. Xylazel employs around 100 people and operates a production facility in Porriño. The company reported revenue of approximately EUR 20 million for FY2017. Akzo Nobel CEO Thierry Vanlancker said of the Spanish acquisition: "As a part of our transformative strategy, we continue to focus on leading market positions delivering leading performance. This couples organic growth with strategic bolt-on acquisitions on top of operational excellence and continuous improvement. By acquiring Xylazel, we will be able to further grow our business in the region and strengthen our position as the leading paints and coatings company in Europe."

Akzo Nobel already eyed to strengthen its footprint in the European decorative paints segment by buying 100 % of the shares of Fabryo Corporation (Fabryo), which is based in Romania and employs some 400 people. The transaction was closed in the beginning of October. By taking over the business, Akzo Nobel is becoming the leader in the Romanian decorative paints market. The transaction included two production facilities and six distribution centers for decorative paints, adhesives and mortars, including one of the largest decorative paints factories in the region, with capacity for further expansion. The business generated revenue of around EUR 45 million in 2017.

Additionally, Akzo Nobel has strengthened its business in Asia by acquiring 100 % shares in Colourland Paints and Colourland Paints (Marketing), a home-grown paints and coatings manufacturer with wide distribution across Malaysia.

PPG Industries latest acquisitions

U.S. rival PPG Industries also recorded two minor acquisitions. The company announced that it has reached an agreement to acquire Hodij Coatings, a performance coatings distributor in The Netherlands. Hodij Coatings distributes a portfolio of well-known professional paint brands in the segments automotive aftersales, protective- and industrial coatings. It has its Head-Office in Hoogeveen, the North of the Netherlands with a branch in Eersel in the South. The company employs 37, predominantly customer facing, staff across its operations. Reported sales in 2017 were EUR 15.7 million.

The second move by PPG was announced just a couple of days ago. PPG said it reached a definitive agreement to acquire SEM Products, a U.S.-based manufacturer of specialized automotive refinish products. The transaction is expected to close in the fourth quarter of 2018, subject to customary closing conditions. SEM, headquartered in Rock Hill, South Carolina, is a manufacturer of repair and refinish products used primarily for automotive and other transportation applications.The company employs approximately 80 people. "PPG’s acquisition of SEM will complement our current automotive refinish product offering and add specialised, value-added products that address the needs of distributors and body shops,” said Gary Danowski, PPG VP, automotive refinish. He also noted that SEM has a history of strong returns.

Ranking: The 25 largest coatings producers in Europe

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