Kansai Paint on Track with Industrial M&A

Although Kansai Paint’s planned sale of its African paint operations to AkzoNobel was called off, the company’s war-chest for making acquisitions is still plentifully stocked – stocked to the extent that it has effected another sizeable acquisition in the European industrial coatings sector with the takeover of Weilburger Coatings.

Weilburger is a long-established name in the European coatings sector and dates back to 1900. The takeover represents part of Kansai Paint’s 17th Mid-Term Management Plan, which is typically how Japanese paint companies pursue the stepwise development of their businesses when it comes to strategy and outlook.

Another aspect seen shaping this 17th plan emphasises the development of a sustainable value chain and we’ll return to this later on.

A €150-Million Business

Kansai’s current strategy includes a focus on Europe, where it sees the continent as a place to build up its access to the best technology, chiefly in the industrial coatings sector as part of its wish to improve its business-to-business operations with a strong emphasis on profitability.

Especially shrewd about this acquisition is that the Weilburger Coatings business has activities in Europe, The Americas and in Asia, so it will strengthen Kansai Paint’s presence in three continents as the deal encompasses the sales and manufacturing sites associated with these different regions too. The Asian operations that it acquires through the purchase are:

• Weilburger Asia Ltd (based in Hong Kong), which had consolidated net sales of nearly ¥4 million in 2022.
• Weilburger Investments, a subsidiary of Weilburger Asia Ltd, and that had net sales of ¥14 million in 2022.
• Weilburger Coatings (Tianjin), China which had net sales of ¥1.5 billion in 2022.

It should be noted that the last two of those three operations were loss-making operations in 2022.

The takeover is being implemented through Kansai Helios Coatings, the company’s hub in Slovenia. The consolidated turnover of Weilburger Coatings in Europe has been placed at about €150 million in 2023.

With the company focusing strongly on technology in its drive for these European acquisitions, the Weilburger takeover means that it will now access its senorail coatings for railway vehicles, senotherm high-temperature coatings for stoves and heat appliances and GREBLON coatings for housewares and industrial bakery equipment.

The Weilburger Graphics business remains with Weilburger and is excluded from the deal. The move will clearly accelerate future developments for the industrial coatings operations and in particular is seen as potentially strengthening the representation and presence in Central Europe.

Frank Gläser, CEO of GREBE Holding, commented on the acquisition, saying, “The future affiliation to the Kansai Helios Group is a perfect strategic fit for the Weilburger companies. With a long and successful growth history of more than 120 years and a high reputation as an innovative and trusted supplier of coatings around the globe, this decision offers excellent synergy effects while maintaining our identity. We are excited and confident that we have made the right decision for our continued sustainable success. Joining forces with a large group of companies will accelerate our growth objectives and provide even greater value to our customers.”

Insights Across the EMEA Region

What is currently happening with Kansai Paint in Europe – and especially through Kansai Helios as its principal European hub – is geared towards sustainability industries, which it sees for now as the rolling stock segment and the powder coatings sector.

However, Kansai Paint also has a Turkish hub where the emphasis is on promoting strong business, even though inflation and interest rates are running high in Turkïye.

Although the company hasn’t ruled out further acquisitions, Kansai’s latest plan states that the broadening of its portfolio of activities is largely completed.  Further south, and now moving forward with its African decorative paint operations still in place, it is seeking to strengthen its position in South Africa and capture a growing share of the markets in East Africa.

How Sustainability Fits

One of the attractions of participating in the European industry is being closer to the heart of where a lot of sustainability work is being carried out, and although Japanese companies are very pro-environment, we’re not hearing so much about sustainability and circularity strategies coming from the high-volume markets of China and the US.

Where Kansai sees its sustainability strategy going is the reduction of Scope 3 emissions and the greater pursuit of eco-friendly finishing technologies such as powder coatings. Its target markets under the sustainability umbrella are the electric vehicle, renewable energy (offshore wind power), industrial equipment and electronic devices sectors. Areas the company is keen to explore include biodegradable raw materials and paints that can be applied with new coating methods.

Quick Recap: Kansai’s European Acquisition Wave

The first acquisition in Kansai’s recent European wave of technology-driven coatings companies was that of Wefa in August 2022. Westdeutsche Farben GmbH (wefa) is a German coatings manufacturer with its own technological expertise in water-based coatings that suits the modern regulatory compliance agenda.

The deal, which had been secured through Kansai Helios, brought Kansai Paint new plants and new expertise within Europe that complemented its Rembrandtin railway and other industrial coatings operations. Wefa is active mainly in the railway sector and it specialises in water-based two-component systems and primers, fillers, textured paints and topcoats, especially those aimed at complex morphologies.

Not long afterwards, Kansai acquired shares in the powder coatings producer CWS Lackfabrik or CWS Group as it is sometimes known. This group held 13 different businesses and was active in the manufacture and sale of powder coatings and coating resins. It boasted consolidated net sales of €96 million in 2021. The purchase price associated with this deal remains undisclosed.

Its third acquisition was the global railway coatings assets from Becker Industrie SAS (part of the German-registered Beckers Group). That deal was announced in December 2022 and the scope ran to all of the Becker Group’s assets in the railway coatings segment, including its products formulations and clients, with the exception of those in China and India. It would lead to Kansai Helios establishing a new French subsidiary. The deal was closed about 12 months ago.