Akzo looking at acquisitions, including ICI
By Jeff Linville -- Furniture Today, July 2, 2007
Amsterdam — The global wood coatings industry could have a different lineup in the near future as Akzo Nobel keeps looking to expand its reach.
Just weeks after announcing plans to buy Chemcraft for an undisclosed amount, Akzo Nobel made an offer of more than $14.2 billion for British paint maker Imperial Chemical Inds. ICI rejected the bid, but some analysts are saying that is part of a negotiating ploy to get a higher price.
The proposed merger would make the Holland-based Akzo Nobel, already one of the largest coatings makers in the world, the global leader with a 14% market share, according to the Financial Times.
That would be three times bigger than the next closest company, PPG Inds., an American company that only does a small portion of its business in furniture coatings.
If Akzo doesn't buy ICI, analysts expect it to look at other possible purchases, like two of its biggest competitors in furniture coatings: Sherwin-Williams and Valspar.
"We see consolidation in the global paints market as inevitable," Citibank analysts Andrew Benson, Sophie Jourdier and Daniel Mon wrote in a note to investors June 18.
They raised the possibility that ICI could also turn around and make a bid for its Dutch rival.
However, Akzo has the upper hand because of its incoming cash flow.
The company will be selling its Organon BioSciences subsidiary by the end of the year, and the deal (estimated at $14.7 billion) will give Akzo funds to make a purchase.
