AkzoNobel and Axalta to merge, creating US$25 billion paint giant

[PARIS] Dulux paintmaker AkzoNobel said on Tuesday (Nov 18) that it plans to merge with paintmaker Axalta Coating Systems in a deal that will create a combined company with an enterprise value of US$25 billion.

The combined company will be initially dual-listed in Amsterdam and New York before moving to a single NYSE listing, and maintaining dual headquarters in Amsterdam and Philadelphia. It will be led by current AkzoNobel chief executive Greg Poux-Guillaume as CEO.

Paintmakers have been merging in order to save money in the face of rising costs, intense competition and the uncertainty created by US President Donald Trump’s tariffs. However, Poux-Guillaume said in an interview that the deal would enable the combined business to make cuts that will drive profitability.

He said the deal would leave the combined company with a higher margin product portfolio than rival BASF’s coatings business, in which private equity firm Carlyle took a majority stake in October.

Savings expected to boost margins

Poux-Guillaume said a large part of the value in the deal comes from cost savings rather than relying on an upturn in demand.

“If you look at Axalta, what really stands out is that they’re very profitable,” Poux-Guillaume said. “If you take the combined profitability of the two businesses put together, including the synergies, you’re talking best in the market.”

Shares in Akzo were flat at 11.11 GMT, paring losses after falling as much as 3.7 per cent, while those in Axalta were 2.5 per cent lower, losing an earlier jump of 2.7 per cent.

The new group is expected to generate a 20 per cent core profit margin, Poux-Guillaume said. AkzoNobel’s profit margin in the third quarter was 15.1 per cent. In 2024, it was 13.8 per cent.

It expects to deliver annual cost savings of US$600 million, 90 per cent of which are expected within the first three years following the close of the transaction.

AkzoNobel and Axalta’s combined business is valued in the deal at eight times its annual earnings, Poux-Guillaume said. That compares with the valuation of 12 times earnings, which BASF sold the stake in its coatings business for.

The new company expects annual revenues of US$17 billion, an annual adjusted core earnings, or earnings before interest, taxes, depreciation and amortisation, of US$3.3 billion, and US$1.5 billion in adjusted free cash flow.

Under the merger, AkzoNobel shareholders will receive a US$2.5 billion dividend payout and are expected to own 55 per cent of the new group, with Axalta investors owning the remaining 45 per cent.

Completion of the merger is expected to close late 2026 to early 2027.

Axalta exclusively makes coatings, with a strong presence in the US market. Following the merger, the combined group will be much more focused on coatings, which are more resilient in consumer downturns, than decorative paints, Poux-Guillaume told Reuters. REUTERS