JSW Paints Acquiring Akzo Nobel India. What next, though?
On 10 October, I published a note explaining why I was confident that JSW Group would make a significant effort to acquire Akzo Nobel’s Dulux.
On 10 October, I published a note explaining why I was confident that JSW Group would make a significant effort to acquire Akzo Nobel’s Dulux.
Of course, I was speculating. But, I had also shared multiple reasons why it was an opportunity unlike any in the sector for JSW Group.
And now, that’s finally happening. It’s almost a done deal, with JSW Paints set to acquire ~75% stake in Akzo Nobel, which operates the Dulux brand.
But, what had I shared in that note back then?
JSW Group has ambitious plans for the paints market, with significant expansion underway, and ample funds to pursue inorganic growth to further its market share.
More importantly, it currently has ~3% of the market share, while Akzo Nobel has around 6%.
Combined, the entity would have a 9% market share. This would make the combined entity into India’s:
No.4 player in the decorative paints market
No.2 player in the industrial paints market
And this will be huge for one more reason.
JSW Paints had set a target to hit 10% market share in the paints market by end of 2026. With this deal, that will be more or less achieved.
..
Most importantly, Birlas had also targeted a 10% market share by the end of 2026. But, they are running ahead of the target in a way.
I say so because, at the end of Q3 FY25, the company had a 3-4% market share, which by the end of Q4 had surged massively to 6-7%.
Thus, as of date, Birlas and JSW are targeting the same things, but at a different level of aggression.
And an acquisition of Akzo Nobel’s India unit could again pit JSW ahead.
Anyhow, with the acquisition almost done now, what’s next?
Well, a merger is imminent. You see, Akzo Nobel is listed in Indian stock markets, while JSW Paints is not.
And it makes no sense for the two companies to merge together upon the acquisition by JSW Paints. Thus, only two possible cases emerge.
Either JSW Paints will merge into Akzo Nobel and become a larger listed company
Akzo Nobel will be delisted and merged into JSW Paints for a IPO in future as a much larger business
Nobody knows for sure what path the Jindals will choose. However, given the challenges and uncertainties involved in delisting, most likely we would see the first case play out in the coming months and quarters.
What do you think?
Best,
Jayant Mundhra
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