Welcome Guest to Coatings World    Login || Register
Last Updated Wednesday, July 23 2014
Print

PPG to acquire AkzoNobel North American Architectural Coatings Business



Published December 14, 2012
Related Searches: Architectural Coatings
 PPG Industries  announced that it has reached a definitive agreement to acquire the North American architectural coatings business of AkzoNobel, N.V., Amsterdam, in a deal valued at $1.05 billion. The transaction has been approved by the boards of directors of both companies and is expected to close in early second quarter 2013, subject to regulatory approvals.

“This acquisition continues the accelerated pace of our business portfolio transformation through further expansion of our coatings businesses,” said Charles E. Bunch, PPG chairman and CEO. “It is also an attractive way to significantly increase our scale in the North American architectural paint market, which we anticipate will benefit from a prolonged construction market recovery.”

Ton Büchner, CEO of AkzoNobel, said, “Over the past four years, the team has done a great job in turning the North American Decorative Paints business around. I am pleased that we have found a respected company to take over the business. This agreement is a good outcome for all stakeholders.”

Bunch said the acquired business had 2011 revenues of about $1.5 billion and “notably expands our customer reach in all three major North American architectural paint distribution channels.” The acquisition includes the addition of about 600 AkzoNobel-owned paint stores creating a combined network of about 1,000 company-owned stores serving the North American market. “It also complements PPG's national home center strategy by extending our branded paint product offerings to more than 8,000 retail outlets,” he added, referencing AkzoNobel- and PPG-branded retail paint products, “and finally, it enhances our already strong presence in the independent paint dealer channel.”

The acquisition includes all AkzoNobel North American architectural coatings manufacturing and distribution facilities, paint stores, product lines and employees related to the production, sale and distribution of architectural coatings in the United States, Canada and the Caribbean.
Leading brands included are Glidden, Flood, Liquid Nails, Sico and CIL. PPG also will license the following brands: Dulyx, Devoe architectural coatings, and Sikkens architectural wood products.

“We expect to achieve significantly improved net operating earnings of about $160 million for the acquired business over a three-year period, including a $60 million improvement immediately upon closing and a total of $90 million by the end of the first year,” Bunch added.
The $60 million improvement anticipated upon closing includes costs that will not be incurred by PPG relating to defined benefit pension expense, amortization expense relating to prior AkzoNobel acquisitions and various administrative costs that will not transfer to PPG. The expected incremental savings of $30 million by the end of the first year and an additional $70 million by the end of the third year following the acquisition include cost synergies stemming from overlap in administration, distribution and manufacturing, the company said.

“Additionally, and in recognition of our strong cash position, we plan to reinitiate our share repurchase program immediately following the completion of the separation of our commodity chemicals business, which we expect to occur in early 2013,” Bunch said. “We anticipate a base level of spending between $500 million and $750 million for share repurchases during 2013.

“The acquisition of the AkzoNobel North American architectural coatings business and planned share repurchases are both consistent with PPG’s long-standing heritage of growing our earnings and returning additional cash to our shareholders. We will still have an elevated level of cash even when considering these two defined uses of cash, and we expect to continue to pursue further earnings-accretive cash deployment actions during 2013,” Bunch concluded.


blog comments powered by Disqus
Receive free Coatings World emails
Sign up now to receive the weekly newsletter, and more!

Enter your email address:
Company Spotlight
BASF Corporation
100 Campus Drive
Florham Park, NJ, 07932
US
View Profile
Micro Powders, Inc.
580 White Plains Rd.
Tarrytown, NY, 10591
US
View Profile
Lubrizol Advanced Materials, Inc.
9911 Brecksville Road
Cleveland, OH, 44141
US
View Profile
Sunin Machine Co., Ltd.
No.96, Chiao Ho Rd ,Chungho Dist
New Taipei City, Taiwan , 235
Taiwan Roc
View Profile
Shamrock Technologies, Inc.
Foot of Pacific Street
Newark, NJ, 07114
USA
View Profile
Houchi Chemical Co., Ltd
No.56, Fu Chow Street
Taipei, Taipei, 100
Taiwan
View Profile
Sun Chemical Corporation Performance Pigments
5020 Spring Grove Avenue
Cincinnati, OH, 45232
USA
View Profile
Keeneyes
18F, No.85, Sec. 1, Chung-Shiao E. Rd.
Taipei, Taiwan, 100
R.O.C.
View Profile
AZ Electronic Materials Co., Ltd.
No. 458-6, Sinsing Road Hu Kou Township Hsinchu Country 303, Taiwan
Hsinchu Country, Taiwan, 303
Taiwan
View Profile
Buhler Group (Nanotechnology)
13105 12th Ave. North
Plymouth, MN, 55441-4509

View Profile
Follow Coatings World On