£23bn Dulux merger to fend off US vultures

DULUX’S owner has revealed it is in talks to merge its paints business with an American rival – months after fending off a takeover bid from another US firm.

Akzo Nobel is in ‘constructive talks’ with coatings and paints producer Axalta over a possible tie-up.

The deal, worth around £23bn, is the first major move by chief executive Thierry Vanlancker who is seeking to boost the business by splitting it in two.

It is not yet clear what a potential merger would mean for the Dulux paint maker’s 3,500 workers in the North East, Glasgow and the Midlands who have been employed by the firm since it took over the paints and coatings division of British chemicals giant ICI in 2008.

The proposed merger comes four months after Akzo fended off a takeover from PPG.

The three-month pursuit by the Pittsburgh-based firm had soured relations with a number of Akzo shareholders – including vulture hedge fund Elliott Advisors, after the Dulux owner rebuffed £18.1bn, £19.3bn and £22.5bn offers.

To appease investor unrest over the decision, Akzo revealed it would be embarking on a strat- egy which involves separating its chemicals business from its paints and coating arm, increasing its financial guidance for the year and handing out £1.3bn in dividends to shareholders.

But the dispute took its toll on ex-chief executive Ton Buchner, who stepped down in July in order to focus on his health.

Vanlancker, who previously headed up the company’s chemicals division, took over.

The firm is still powering ahead with its ‘separation strategy’ despite losing its chief financial officer Maelys Castella due to health reasons in September and warning it would not hit its profit target for the year.

It said the separation of its chemicals business is on track for April 2018 but a fund manager at one of Akzo’s top 10 investors suggested the potential tie-up was an attempt to compensate for the poor results.

The manager, who preferred not to be named, said: ‘This seems a classic attack-is-the-best-defence strategy.

‘Akzo over promised after defending their own company and started to fail to deliver in Q3 so need to do something transformational.’

Meanwhile PPG, which faced a six-month cooling period after its third offer was rebuffed in June, is rumoured to be considering another offer.

But in a statement yesterday the American firm said it ‘does not have any comment related to this matter.’