Under-pressure Dulux owner reveals merger

Dulux owner AkzoNobel has confirmed it is in talks over a potential merger with US firm Axalta, just months after rejecting a multi-billionpound takeover bid by US rival PPG Industries.

The firm said it made the announcement in response to market speculation.

“AkzoNobel confirms today it is currently in constructive discussions regarding a merger of the AkzoNobel Paints & Coatings business with Axalta,” it said.

“This will create a leading global paints and coatings company through a merger of equals.”

The combined business could be valued at £22.8 billion.

AkzoNobel confirmed the planned separation of its speciality chemicals business was still on track for April next year and was not affected by the discussions.

Jefferies analyst Laurence Alexander said: “If the discussions proceed at the same pace as other recent chemical transactions, AkzoNobel could commit to a transaction value before realising the monetisation of its chemicals business.”

AkzoNobel had faced strong criticism for its rejection of PPG’s £24bn takeover bid. It sparked a long-running dispute with Elliott Advisors – an activist investor that had previously engaged in a major showdown with Alliance Trust that ended in significant boardroom change at the Dundee-based finance house – over the way the paint maker is run before reaching a truce in August.

But AkzoNobel went on to issue a profit warning in September.

While full-year earnings are expected to be higher than last year, the firm said the figures will be “less than the previously communicated increase of £91.7 million.

Akzo also said it was implementing a new management structure and additional measures to ensure it hits its 2020 financial guidance.