Japanese paint giant Nippon Paint is making another run at Akzo Nobel's decorative paints business, reportedly offering €7.5 billion for the unit. But so far, the Dutch company's management isn't picking up the phone.
According to Bloomberg, the latest bid values Akzo's decorative paints division at roughly 12 times its projected 2026 earnings before interest, taxes, depreciation, and amortization (EBITDA)—a common measure of cash profit that strips out accounting and financing costs. That multiple is in line with what similar paint businesses have fetched in recent deals, suggesting the offer is serious on paper.
Yet Akzo Nobel has not engaged with the proposal, leaving the situation in a holding pattern. Without the board opening a formal process, there's no timetable, no access to confirm financial details, and plenty of room for Nippon Paint to walk away. Markets typically treat such headlines as expressions of interest rather than imminent transactions.
Why Akzo's Decorative Paints Unit Matters
Akzo Nobel is best known for its consumer paint brands like Dulux, which fall under the decorative paints division. This unit generates steady revenue from homeowners, contractors, and retailers, making it a predictable cash generator. But it also faces headwinds from rising raw material costs and slower demand in key markets like Europe and China.
For Nippon Paint, acquiring the business would be a major strategic move. The Japanese company has been expanding aggressively through acquisitions, particularly in Asia and now Europe. Adding Akzo's decorative paints portfolio would give it a stronger foothold in Western markets and access to well-known brands that command premium pricing.
The €7.5 billion price tag is not small, but it reflects the value of a business with established distribution networks and brand loyalty. For context, similar deals in the paints and coatings sector have often traded at EBITDA multiples between 10 and 14 times, so Nippon's offer sits within that range.
What It Means for Investors
For shareholders of both companies, the key question is whether Akzo's board will eventually come to the table. If they do, it could unlock significant value for Akzo investors, who have seen the stock underperform in recent years due to margin pressure and a sluggish European economy. A sale of the decorative paints unit would allow Akzo to focus on its higher-margin performance coatings business, which serves industrial clients like automakers and aerospace firms.
But the silence from Akzo's management suggests they may believe the business is worth more, or that a sale would not be in the company's long-term interest. Akzo has previously rejected approaches from other suitors, including a 2017 bid from PPG Industries, so a pattern of resistance is established.
For Nippon Paint investors, the risk is that the company overpays or gets drawn into a prolonged bidding war. The Japanese firm has a track record of disciplined acquisitions, but any deal of this size would require significant financing, potentially weighing on its balance sheet.
In the broader market, the bid comes at a time when M&A activity in the chemicals and paints sector has been picking up, as companies look to consolidate and cut costs. Similar moves have been seen in other industries, such as FedEx selling its supply chain unit and SoftBank's LY and Bain sweetening their bid for Kakaku.com.
What to Watch Next
Investors should monitor any public statements from Akzo Nobel's management, particularly during the company's upcoming earnings calls. If the board signals openness to discussions, the stock could rally. Conversely, a firm rejection would likely send shares lower.
Also watch for regulatory hurdles. A deal of this size would face antitrust scrutiny in Europe and possibly Asia, especially if Nippon Paint already has a presence in those markets. The outcome could take months to resolve.
For now, the ball is in Akzo's court. Whether they answer the door remains to be seen.
