Nippon Paint to Acquire Cromology

Nippon Paint Holdings Co., Ltd. (NPHD) is announcing that DuluxGroup Limited, its consolidated subsidiary, has committed to acquire the share capital of Cromology Holding SAS and its subsidiaries to make them indirectly owned subsidiaries of NPHD.

The share acquisition will be conducted through DGL International (UK) Ltd, a UK-based company newly established by DuluxGroup.

Cromology is engaged in manufacturing and sale of decorative paints and other paint-related products in Europe. DuluxGroup has entered into a Put Option Agreement with the main shareholders of Cromology, including notably the Wendel group through its subsidiary Winvest International SCS FIAR, pursuant to which DuluxGroup committed to acquire Cromology.

The Board of Directors of NPHD decided during its meeting held on Oct. 13, 2021 to entrust the decision-making on the signing of the Put Option Agreement, to which a draft Share Purchase Agreement is attached, to the Representative Executive Officers and Co-Presidents. Since all conditions have been met, Nippon Paint has decided to formally conclude the Put Option Agreement on Oct. 20, 2021.

Reasons for the Acquisition of Shares

The Nippon Paint Group is pursuing maximization of shareholder value as its ultimate objective. Toward achieving this goal, its New Medium-Term Plan has set targets to achieve revenue growth that outpaces the market growth in its operating regions by promoting growth strategies in its operating regions and businesses based on Powerful Partnerships between group partner companies. In addition, Nippon Paint is aggressively pursuing M&A activities by leveraging the high growth potential and stable cash flows of the paint market in order to firmly establish sustainable growth and further increase its market presence around the world.

Cromology is the fourth largest architectural paints manufacturer in Europe. As a market leader in the architectural paints market, Cromology operates in broad markets in Europe with high market share, rated top three in France, Italy, Spain and Portugal.

Under the Nippon Paint Group’s ownership, combining the group’s investment capacity and capability in brand management, marketing and innovation, with a recognized local brand and strong trade and retail relationships, would give access to scale across France, Spain, Italy and Portugal and subsequently into other major European markets, including some new Central European countries.

Cromology would provide the right level of scale, volume and manufacturing capability to form the entry point into building a decorative paint and coatings business in Europe, and provide the platform to bolt in other acquisitions.

Cromology’s integrated wholly owned network of 386 company operated stores across France, Portugal and Switzerland presents an opportunity to leverage DuluxGroup’s operational capability in running trade centers. It also provides a strong platform to leverage DuluxGroup’s capabilities in selling to DIY consumers in retail channels such as bog box hardware and independent hardware. Finally, it also presents an opportunity to launch other brands in the DuluxGroup’s portfolio, including in Woodcare and Texture coatings and Sealants, Adhesives & Fillers.

The contemplated Acquisition is expected to contribute to be EPS accretive from the first year of acquisition. The shares of Cromology would be acquired by DGL International (UK) Ltd, a UK-based company newly established by DuluxGroup using funds provided by NPHD through borrowings from financial institutions. Nippon is not proposing to raise equity funding.