Key bidders for AkzoNobel’s India paint business have raised issues relating to the “premium” being pitched for the Dulux brand here. Some of the bidders, in their meetings with merchant bankers and Akzo top-brass, have sought for an at least 20-25 per cent reduction in valuation – mostly closer to the ₹12,000 crore range, as against ₹18,000–20,000 crore being sought, sources aware told businessline.
The Citi Group is the merchant banker for Amsterdam-based Akzo Nobel NV, whose India business and South-East Asia businesses are under review at the moment.
Sources, who have been in touch with Akzo top brass too, mentioned that some of the bidders are “wary” of the high premiums sought.
Multiple bidders have explained that the Akzo India market cap has been hovering in the ₹8,000–10,000 crore range, as a last four year-odd average. However, stock movement happened only around June-July 2024 and post the October announcement of the business being put under strategic review, the market cap started moving up and stabilised in the ₹15,000–16,000 crore range. Currently, it is around ₹14,800 crore-odd.
Dulux brand
“This is already a premium valuation considering Akzo India has a less than 10 per cent market share. But yes, the Dulux brand carries a premium with it and a distribution push,” one of the interested bidders explained.
It was also pointed out to the Akzo top brass, that the company would be selling – if at all – only the India decorative paints and industrial coatings businesses. However, the highly profitable powdered coatings business is being valued separately and is sold off independently to another subsidiary of Akzo NV. Hence, the market cap of the decorative paints business “automatically comes down”.
“So, we expect a ₹4,000-5,000 crore reduction in market cap as the powder coatings business is hived off. Now adding a control premium, the valuation is expected to be a max of ₹12,000–15,000 crore,” a second person explained.
Top contenders
While JSW Paints and Pidilite are among the top names who have been considered for the second round of discussions, after placing non-binding bids; other names in the fray include that of Indigo Paints and a PE firm.
Some more PE firms are in the fray while many of them have initiated discussions with Indian deco-paint makers to make binding bids of Akzo India. Binding bids are likely in the next three to four months.
JSW, Pidilite and Indigo did not respond to queries from businessline while Akzo is yet to respond to mails.
Asian Paints, Berger Paints and Kansai Nerolac are the three large players in India, with the first two – which opted out of the race to buy Akzo India – occupying nearly 75 per cent market share.
“Some of these points have come up for discussion. So, valuations are still open to changes. However, merchant bankers are expecting aggressive bids indicative of the present market value,” a third person said.
